** **

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D. C. 20549**

 

# **FORM 10-Q**

# ** **

| **ý**                        | **QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934**                                                                                                                                                                                    |
|-----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              |                                                                                                                                                                                                                                                                                 |
|                              | **For the quarterly period ended  June 30, 2005**                                                                                                                                                                                                                               |
|                              |                                                                                                                                                                                                                                                                                 |
| **OR**                            |
|                              |                                                                                                                                                                                                                                                                                 |
| **o**                             | **TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934**                                                                                                                                                                                   |
|                              |                                                                                                                                                                                                                                                                                 |
|                              | **For the transition period from                    to                    ** |
|                              |                                                                                                                                                                                                                                                                                 |
| **Commission File Number 1-7796** |

 

**TIPPERARYCORPORATION**

(Exact name of registrantas specified in its charter)

 
| **Texas**                                   | ** ** | **75-1236955**      |
|---------------------------------------------|------------|---------------------|
| (State or other  jurisdiction of            |       | (I.R.S. Employer    |
| incorporation or  organization)             |       | Identification No.) |
|                                        |       |                |
| **633 Seventeenth Street, Suite 1800** |       |                |
| **Denver, Colorado**                        | ** ** | **80202**           |
| (Address of principal  executive offices)   |       | (Zip Code)          |
|                                        |       |                |
| **(303) 293-9379**                          |
| (Issuer’s telephone  number)           |

 

Indicate by check mark whether the registrant (1) filed allreports required to be filed by Section 13 or 15(d) of the ExchangeAct of 1934 during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.

Yes     ý          No     o

 

Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Exchange Act).

Yes     o          No     ý

 

Indicate the number of shares outstanding of each of the issuer’sclasses of common stock, as of the latest practicable date.

 

| **Class**                     | ** ** | **Outstanding at August 10, 2005** |
|-------------------------------|------------|-----------------------------------------|
| Common Stock, $.02 par  value |       | 41,414,394 shares                       |

 

 

----

 

**TIPPERARY CORPORATION ANDSUBSIDIARIES**

 

Index to Form 10-Q

 
| PART I.  FINANCIAL INFORMATION |                                                                                                |
|-------------------------------------|-----------------------------------------------------------------------------------------------------|
|                                |                                                                                                |   |
| Item 1.                             | Financial  Statements                                                                               |   |
|                                |                                                                                                |   |
|                                | Consolidated  Balance Sheets  June 30, 2005 and December 31, 2004                         |   |
|                                |                                                                                                |   |
|                                | Consolidated  Statements of Operations  Three and six months ended June 30, 2005 and 2004      |   |
|                                |                                                                                                |   |
|                                | Consolidated  Statements of Stockholders’ Equity  Six months ended June 30, 2005 and 2004 |   |
|                                |                                                                                                |   |
|                                | Consolidated  Statements of Cash Flows  Six months ended June 30, 2005 and 2004                |   |
|                                |                                                                                                |   |
|                                | Notes  to Consolidated Financial Statements                                                         |   |
|                                |                                                                                                |   |
| Item 2.                             | Management’s  Discussion and Analysis of Financial Condition and Results of Operations         |   |
|                                |                                                                                                |   |
| Item 3.                             | Quantitative  and Qualitative Disclosure About Market Risk                                          |   |
|                                |                                                                                                |   |
| Item 4.                             | Controls  and Procedures                                                                            |   |
|                                |                                                                                                |   |
| PART II.  OTHER INFORMATION    |                                                                                                |
|                                |                                                                                                |   |
| Item 1.                             | Legal  Proceedings                                                                                  |   |
|                                |                                                                                                |   |
| Item 2.                             | Unregistered  Sales of Equity Securities and Use of Proceeds                                        |   |
|                                |                                                                                                |   |
| Item 6.                             | Exhibits                                                                                            |   |
|                                |                                                                                                |   |
| SIGNATURES                          |                                                                                                |
|                                |                                                                                                |   |
| EXHIBIT INDEX                  |                                                                                                |

 

----

 

# **PART I - FINANCIAL INFORMATION**

# ** **

**Item 1.  Financial Statements**

 

**TIPPERARYCORPORATION AND SUBSIDIARIES**

ConsolidatedBalance Sheets

(dollars inthousands)

(unaudited)

 
| ** **                                                                                                                                                                                                                | ** ** | **June 30,  2005** | ** ** | **December 31,  2004** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
|                                                                                                                                                                                                                      |       |                    |       |                        |       |
| ASSETS                                                                                                                                                                                                                    |       |                    |       |                        |       |
| Current assets:                                                                                                                                                                                                           |       |                    |       |                        |       |
| Cash and cash  equivalents                                                                                                                                                                                                |       | $                       | 447        |                        | $          | 3,698 |   |
| Receivables                                                                                                                                                                                                               |       | 2,362                   |       | 2,156                       |       |
| Other current  assets                                                                                                                                                                                                     |       | 167                     |       | 436                         |       |
| Total current  assets                                                                                                                                                                                                     |       | 2,976                   |       | 6,290                       |       |
|                                                                                                                                                                                                                      |       |                    |       |                        |       |
| Property, plant  and equipment, at cost:                                                                                                                                                                                  |       |                    |       |                        |       |
| Oil and gas  properties, full cost method:                                                                                                                                                                                |       |                    |       |                        |       |
| Proved                                                                                                                                                                                                                    |       | 130,574                 |       | 125,195                     |       |
| Unproved                                                                                                                                                                                                                  |       | 25,086                  |       | 19,946                      |       |
| Other property  and equipment                                                                                                                                                                                             |       | 4,039                   |       | 3,943                       |       |
|                                                                                                                                                                                                                      |       | 159,699                 |       | 149,084                     |       |
|                                                                                                                                                                                                                      |       |                    |       |                        |       |
| Less accumulated  depreciation, depletion and amortization                                                                                                                                                                |       | (11,113                 | )          | (9,833                      | )          |
| Property, plant  and equipment, net                                                                                                                                                                                       |       | 148,586                 |       | 139,251                     |       |
|                                                                                                                                                                                                                      |       |                    |       |                        |       |
| Debt issuance  costs                                                                                                                                                                                                      |       | 4,690                   |       | 4,661                       |       |
| Other noncurrent  assets                                                                                                                                                                                                  |       | 445                     |       | 482                         |       |
|                                                                                                                                                                                                                      |       | $                       | 156,697    |                        | $          | 150,684 |   |
|                                                                                                                                                                                                                      |       |                    |       |                        |       |
| LIABILITIES AND  STOCKHOLDERS’ EQUITY                                                                                                                                                                                |       |                    |       |                        |       |
| Current  liabilities:                                                                                                                                                                                                     |       |                    |       |                        |       |
| Current portion  of long-term debt                                                                                                                                                                                        |       | $                       | 9,400      |                        | $          | — |   |
| Accounts payable                                                                                                                                                                                                          |       | 3,068                   |       | 1,664                       |       |
| Accrued  liabilities                                                                                                                                                                                                      |       | 3,930                   |       | 1,881                       |       |
| Royalties  payable                                                                                                                                                                                                        |       | 208                     |       | 193                         |       |
| Total current  liabilities                                                                                                                                                                                                |       | 16,606                  |       | 3,738                       |       |
|                                                                                                                                                                                                                      |       |                    |       |                        |       |
| Long-term  debt-related parties                                                                                                                                                                                           |       | 13,000                  |       | 17,000                      |       |
| Long-term debt                                                                                                                                                                                                            |       | 95,717                  |       | 91,352                      |       |
| Other long-term  liabilities                                                                                                                                                                                              |       | 1,006                   |       | 273                         |       |
|                                                                                                                                                                                                                      |       |                    |       |                        |       |
| Commitments and  contingencies (Note 6)                                                                                                                                                                                   |       |                    |       |                        |       |
|                                                                                                                                                                                                                      |       |                    |       |                        |       |
| Stockholders’ equity                                                                                                                                                                                                 |       |                    |       |                        |       |
| Preferred stock:                                                                                                                                                                                                          |       |                    |       |                        |       |
| Cumulative; par  value $1.00; 10,000,000 shares authorized;  none issued                                                                                                                                                  |       | —                  |       | —                      |       |
| Non-cumulative,  par value $1.00; 10,000,000 shares authorized;  none issued                                                                                                                                              |       | —                  |       | —                      |       |
| Common stock;  par value $.02; 50,000,000 shares authorized;  41,380,594 and 41,365,994 shares issued and 41,370,994 and 41,355,994 shares  outstanding as of June 30, 2005 and December 31, 2004, respectively |       | 828                     |       | 827                         |       |
| Capital in  excess of par value                                                                                                                                                                                           |       | 158,464                 |       | 158,360                     |       |
| Accumulated  deficit                                                                                                                                                                                                      |       | (136,206                | )          | (128,653                    | )          |
| Accumulated  other comprehensive income                                                                                                                                                                                   |       | 7,307                   |       | 7,812                       |       |
| Treasury stock,  at cost; 9,600 shares                                                                                                                                                                                    |       | (25                     | )          | (25                         | )          |
| Total  stockholders’ equity                                                                                                                                                                                          |       | 30,368                  |       | 38,321                      |       |
|                                                                                                                                                                                                                      |       | $                       | 156,697    |                        | $          | 150,684 |   |

 

See accompanying notes to Consolidated Financial Statements.

 

1

----

 

# **TIPPERARY CORPORATION ANDSUBSIDIARIES**

Consolidated Statementsof Operations

(in thousands, except pershare data)

(unaudited)

 
| ** **                                             | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|--------------------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                                             | ** ** | **2005**                              | ** ** | **2004**                            | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                             | ** ** | ** **                            | ** ** | ** **                          | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenues                                               |       | $                                     | 3,199      |                                | $          | 1,562 |   | $ | 6,574 |   | $ | 2,730 |   |
|                                                   |       |                                  |       |                                |       |   |   |   |   |
| Costs and  expenses:                                   |       |                                  |       |                                |       |   |   |   |   |
| Operating                                              |       | 2,357                                 |       | 1,247                               |       | 4,362 |   | 2,641 |   |
| Depreciation,  depletion and amortization              |       | 666                                   |       | 356                                 |       | 1,370 |   | 607 |   |
| Asset retirement  obligation accretion                 |       | 9                                     |       | 9                                   |       | 18 |   | 18 |   |
| Impairment of  oil and gas properties                  |       | —                                |       | —                              |       | — |   | 150 |   |
| General and  administrative                            |       | 1,749                                 |       | 1,510                               |       | 3,937 |   | 3,554 |   |
| Total costs and  expenses                              |       | 4,781                                 |       | 3,122                               |       | 9,687 |   | 6,970 |   |
| Operating loss                                         |       | (1,582                                | )          | (1,560                              | )          | (3,113 | ) | (4,240 | ) |
|                                                   |       |                                  |       |                                |       |   |   |   |   |
| Other income  (expense):                               |       |                                  |       |                                |       |   |   |   |   |
| Interest and  other income                             |       | 41                                    |       | 69                                  |       | 80 |   | 107 |   |
| Interest expense                                       |       | (2,345                                | )          | (2,097                              | )          | (4,519 | ) | (4,233 | ) |
| Other expense                                          |       | (6                                    | )          | (6                                  | )          | (1 | ) | (9 | ) |
| Total other  income (expense)                          |       | (2,310                                | )          | (2,034                              | )          | (4,440 | ) | (4,135 | ) |
| Loss before  income taxes                              |       | (3,892                                | )          | (3,594                              | )          | (7,553 | ) | (8,375 | ) |
|                                                   |       |                                  |       |                                |       |   |   |   |   |
| Income tax  benefit                                    |       | —                                |       | —                              |       | — |   | — |   |
| Loss before  minority interest                         |       | (3,892                                | )          | (3,594                              | )          | (7,553 | ) | (8,375 | ) |
|                                                   |       |                                  |       |                                |       |   |   |   |   |
| Minority  interest in loss of subsidiary               |       | —                                |       | 63                                  |       | — |   | 418 |   |
| Net loss                                               |       | $                                     | (3,892     | )                                   | $          | (3,531 | ) | $ | (7,553 | ) | $ | (7,957 | ) |
|                                                   |       |                                  |       |                                |       |   |   |   |   |
| Net loss per  share basic and diluted                  |       | $                                     | (.09       | )                                   | $          | (.09 | ) | $ | (.18 | ) | $ | (.20 | ) |
|                                                   |       |                                  |       |                                |       |   |   |   |   |
| Weighted average  shares outstanding basic and diluted |       | 41,365                                |       | 39,325                              |       | 41,361 |   | 39,308 |   |

 

See accompanying notes to Consolidated Financial Statements.

 

2

----

 

**TIPPERARYCORPORATION AND SUBSIDIARIES**

Consolidated Statements of Stockholders’ Equity

(in thousands)

(unaudited)

 

 
| ** **                               | ** ** | **Common Stock** | ** ** | **Capital in  excess of** | ** ** | **Accumulated** | ** ** | **Accumulated  Other  Comprehensive** | ** ** | **Treasury Stock** | ** ** | ** ** | ** ** |
|------------------------------------------|------------|------------------|------------|---------------------------|------------|-----------------|------------|---------------------------------------|------------|--------------------|------------|------------|------------|
| ** **                               | ** ** | **Shares**       | ** ** | **Amount**                | ** ** | **par value**   | ** ** | **Deficit**                           | ** ** | **Income**         | ** ** | **Shares** | ** ** | **Amount** | ** ** | **Total** | ** ** |
| ** **                               | ** ** | ** **       | ** ** | ** **                | ** ** | ** **      | ** ** | ** **                            | ** ** | ** **         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Balance at  December 31, 2003       |       | 39,221           |       | $                         | 785        |            | $          | 149,970                               |       | $                  | (113,315   | )          | $          | 7,094 |   | 10 |   | $ | (25 | ) | $ | 44,509 |   |
|                                     |       |             |       |                      |       |            |       |                                  |       |               |       |       |       |   |   |   |   |
| Warrants granted  for services           |       | —           |       | —                    |       | 66              |       | —                                |       | —             |       | —     |       | — |   | 66 |   |
| Common stock  issued:                    |       |             |       |                      |       |            |       |                                  |       |               |       |       |       |   |   |   |   |
| Stock options  exercised                 |       | 105              |       | 2                         |       | 285             |       | —                                |       | —             |       | —     |       | — |   | 287 |   |
|                                     |       |             |       |                      |       |            |       |                                  |       |               |       |       |       |   |   |   |   |
| Comprehensive loss:                      |       |             |       |                      |       |            |       |                                  |       |               |       |       |       |   |   |   |   |
| Net loss                                 |       | —           |       | —                    |       | —          |       | (7,957                                | )          | —             |       | —     |       | — |   | (7,957 | ) |
| Foreign currency  translation adjustment |       | —           |       | —                    |       | —          |       | —                                |       | (2,545             | )          | —     |       | — |   | (2,545 | ) |
| Total  comprehensive loss                |       |             |       |                      |       |            |       |                                  |       |               |       |       |       |   |   | (10,502 | ) |
| Balance at  June 30, 2004           |       | 39,326           |       | $                         | 787        |            | $          | 150,321                               |       | $                  | (121,272   | )          | $          | 4,549 |   | 10 |   | $ | (25 | ) | $ | 34,360 |   |
|                                     |       |             |       |                      |       |            |       |                                  |       |               |       |       |       |   |   |   |   |
| Balance at  December 31, 2004       |       | 41,356           |       | $                         | 827        |            | $          | 158,360                               |       | $                  | (128,653   | )          | $          | 7,812 |   | 10 |   | $ | (25 | ) | $ | 38,321 |   |
| Warrants granted  for services           |       | —           |       | —                    |       | 12              |       | —                                |       | —             |       | —     |       | — |   | 12 |   |
| Common stock  issued:                    |       |             |       |                      |       |            |       |                                  |       |               |       |       |       |   |   |   |   |
| Stock options  exercised                 |       | 15               |       | 1                         |       | 92              |       | —                                |       | —             |       | —     |       | — |   | 93 |   |
|                                     |       |             |       |                      |       |            |       |                                  |       |               |       |       |       |   |   |   |   |
| Comprehensive  loss:                     |       |             |       |                      |       |            |       |                                  |       |               |       |       |       |   |   |   |   |
| Net loss                                 |       | —           |       | —                    |       | —          |       | (7,553                                | )          | —             |       | —     |       | — |   | (7,553 | ) |
| Foreign currency  translation adjustment |       | —           |       | —                    |       | —          |       | —                                |       | (505               | )          | —     |       | — |   | (505 | ) |
| Total  comprehensive loss                |       |             |       |                      |       |            |       |                                  |       |               |       |       |       |   |   | (8,058 | ) |
| Balance at  June 30, 2005           |       | 41,371           |       | $                         | 828        |            | $          | 158,464                               |       | $                  | (136,206   | )          | $          | 7,307 |   | 10 |   | $ | (25 | ) | $ | 30,368 |   |

 

See accompanyingnotes to Consolidated Financial Statements.

 

3

----

 

# **TIPPERARY CORPORATION ANDSUBSIDIARIES**

Consolidated Statementsof Cash Flows

(in thousands)

(unaudited)

 
| ** **                                                                   | ** ** | **Six months ended  June 30,** | ** ** |
|------------------------------------------------------------------------------|------------|-------------------------------------|------------|
| ** **                                                                   | ** ** | **2005**                            | ** ** | **2004** | ** ** |
| Cash flows from operating  activities:                                       |       |                                |       |   |   |
| Net loss                                                                     |       | $                                   | (7,553     | ) | $ | (7,957 | ) |
| Adjustments to  reconcile net loss to net cash used in operating activities: |       |                                |       |   |   |
| Depreciation,  depletion and amortization                                    |       | 1,370                               |       | 607 |   |
| Amortization of  debt issuance costs                                         |       | 569                                 |       | 197 |   |
| Warrants granted  for services                                               |       | 12                                  |       | 66 |   |
| Minority  interest in loss of subsidiary                                     |       | —                              |       | (418 | ) |
| Asset retirement  obligation accretion                                       |       | 18                                  |       | 18 |   |
| Impairment of  oil and gas properties                                        |       | —                              |       | 150 |   |
| Accrued interest  added to principal                                         |       | 1,281                               |       | — |   |
| Changes in current  assets and current liabilities:                          |       |                                |       |   |   |
| (Increase)  decrease in receivables                                          |       | (206                                | )          | 241 |   |
| Decrease in  other current assets                                            |       | 299                                 |       | 120 |   |
| Increase  (decrease) in accounts payable and accrued liabilities             |       | 392                                 |       | (149 | ) |
| Increase in  royalties payable                                               |       | 15                                  |       | 2 |   |
| Net cash used in  operating activities                                       |       | (3,803                              | )          | (7,123 | ) |
|                                                                         |       |                                |       |   |   |
| Cash flows from  investing activities:                                       |       |                                |       |   |   |
| Capital  expenditures                                                        |       | (9,832                              | )          | (9,431 | ) |
| Net cash used in  investing activities                                       |       | (9,832                              | )          | (9,431 | ) |
|                                                                         |       |                                |       |   |   |
| Cash flows from  financing activities:                                       |       |                                |       |   |   |
| Proceeds from  exercise of common stock options                              |       | 93                                  |       | 287 |   |
| Proceeds from  borrowings                                                    |       | 11,028                              |       | 86,436 |   |
| Principal  repayments                                                        |       | (704                                | )          | (68,190 | ) |
| Debt issuance  costs and other                                               |       | (6                                  | )          | (3,313 | ) |
| Net cash  provided by financing activities                                   |       | 10,411                              |       | 15,220 |   |
|                                                                         |       |                                |       |   |   |
| Effect of  exchange rate changes on cash                                     |       | (27                                 | )          | (94 | ) |
|                                                                         |       |                                |       |   |   |
| Net decrease in  cash and cash equivalents                                   |       | (3,251                              | )          | (1,428 | ) |
|                                                                         |       |                                |       |   |   |
| Cash and cash  equivalents at beginning of period                            |       | 3,698                               |       | 2,996 |   |
|                                                                         |       |                                |       |   |   |
| Cash and cash  equivalents at end of period                                  |       | $                                   | 447        |   | $ | 1,568 |   |

 

See accompanying notes toConsolidated Financial Statements.

 

4

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**TIPPERARY CORPORATION AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

**NOTE 1 – OPERATIONS AND SIGNIFICANT ACCOUNTINGPOLICIES**

 

## Basis of Presentation

 

In this quarterly report on Form 10-Q, unless the contextrequires otherwise, when we refer to “we,” “us,” “our,” “Tipperary,” and “theCompany,” we are describing Tipperary Corporation and its subsidiaries on aconsolidated basis.

 

In the opinion of management, the accompanying unaudited Consolidated FinancialStatements reflect all adjustments, consisting only of normal recurringadjustments, which are necessary for a fair presentation of the financialposition of Tipperary Corporation and its subsidiaries at June 30, 2005, andthe results of their operations for the three-month and six-month periods endedJune 30, 2005 and 2004 and their cash flows for the six-month periods endedJune 30, 2005 and 2004. The Consolidated Financial Statements include theaccounts of Tipperary Corporation and its wholly-owned subsidiaries, TipperaryOil and Gas Corporation, Tipperary CSG, Inc., Tipperary Queensland, Inc.and Burro Pipeline Corporation, and its 90%-owned subsidiary, Tipperary Oil andGas (Australia) Pty Ltd (“TOGA”).  Allintercompany transactions and balances have been eliminated in consolidation.  The accounting policies followed by theCompany are included in Note 1 to the Consolidated Financial Statements in itsAnnual Report on Form 10-K for the year ended December 31, 2004.  These financial statements should be read inconjunction with the Form 10-K.

 

Impact of New Accounting Pronouncements

 

In June 2005, the FASB issued Statement No. 154, “Accounting Changesand Error Corrections – A replacement of APB No. 20 and FASB Statement No.3”  (“SFAS 154”).  SFAS 154 provides guidance on the accountingfor and reporting of error corrections, changes in accounting principles andchanges in accounting estimates.  Itestablishes restatement as the required method for reporting errorcorrections.  It establishesretrospective application (unless impracticable) for reporting changes inaccounting principle in the absence of explicit transition requirements specificto the newly adopted accounting principle. For a restatement, a presentation of current and prior period financialstatements shows each presented statement corrected for any errors in thatstatement in previous presentations.  Forretrospective application, each presented statement reflects the change inaccounting principle as if the change had occurred prior to the presentedperiods.  A current change in accountingestimate is not treated retrospectively, but prospectively beginning with thecurrent period.  SFAS 154 is required tobe adopted in fiscal years beginning after December 15, 2005.  The Company does not believe its adoptionwill have a material impact on its financial statements.

 

In March 2005, the FASB issued FASB Interpretation No. 47, “Accountingfor Conditional Asset Retirement Obligation” (“FIN 47”).  This Interpretation clarifies the definitionand treatment of conditional asset retirement obligations as discussed in FASBStatement No. 143, “Accounting for Asset Retirement Obligations.”  A conditional asset retirement obligation isdefined as an asset retirement activity in which the timing and/or method ofsettlement are dependent on future events that may be outside the control of a company.  FIN 47 states that a company must record aliability when incurred for conditional asset retirement obligations if thefair value of the obligation is reasonably estimable.  This Interpretation is intended to providemore information about long-lived assets, more information about future cash outflowsfor these obligations and more consistent recognition of theseliabilities.  FIN 47 is effective forfiscal years ending after December 15, 2005.  The Company does not believe that itsfinancial position, results of operations or cash flows will be impacted bythis Interpretation.

 

InDecember 2004, the FASB issued a revision to SFAS No. 123, “Accountingfor Stock-Based Compensation,” SFAS No. 123R, “Share-Based Payment.” SFAS No. 123Rfocuses primarily on transactions in which an entity exchanges its equityinstruments for employee services and generally establishes standards for theaccounting for transactions in which an entity obtains goods or services inshare-based payment transactions and is required to expense the value ofemployee stock options and similar awards. The Securities and Exchange Commission recently delayed theimplementation date for this pronouncement. We now expect to adopt SFAS No. 123R effective January 1, 2006using the modified prospective application. We do not expect SFAS No. 123R to have a material effect on ourfinancial position, results of operations or cash flows.

 

We have reviewed all other recently issued, but not yet adopted,accounting standards in order to determine their effects, if any, on ourresults of operations or financial position. Based on that review, we believe that none of these pronouncements willhave a significant effect on our current or future financial position orresults of operations.

 

5

----

 

RevenueRecognition and Gas Imbalances

 

The Company recognizesnatural gas revenue from its interests in producing wells as natural gas isproduced and sold from those wells. The Company uses the sales method ofaccounting for these revenues. Under the sales method, revenues are recognizedbased on actual volumes sold to purchasers. With natural gas productionoperations, joint owners may take more or less than the production volumesentitled to them under the governing operating agreement. If excess takes of naturalgas exceed the Company’s remaining proved reserves for the property, it recordsa natural gas imbalance in other liabilities. As of June 30, 2005, the Company had taken and sold more than itsshare of natural gas volumes produced from the Comet Ridge project and wasoverproduced by approximately 1,636 MMcf (net of royalties). Based on the June 30,2005 average sales price of $1.92 per Mcf, this overproduction representsapproximately $3.2 million in gas revenues. At June 30, 2005, noliability has been recorded for the excess volumes taken, as they did notexceed the Company’s share of remaining proved reserves. Under the terms of thegoverning gas balancing agreement, the Company may be required to reduce themonthly volumes it sells by up to 50% of TOGA’s entitled share of sales, toenable underproduced parties to sell more than their entitled share of the gassales and cure the imbalance.

 

Stock-Based Compensation

 

SFAS No. 148 and No. 123 encourage, but do not require,companies to record the compensation cost for stock-based employee compensationplans at fair value.  At June 30,2005, the Company had two stock-based employee option plans and warrants issuedto directors and employees.  The Companyhas chosen to continue to account for stock-based compensation using theintrinsic value method prescribed in Accounting Principles Board Opinion No. 25,“Accounting for Stock Issued to Employees,” (“APB 25”) and has applied thedisclosure provisions of SFAS Nos. 123 and 148. Accordingly, compensation cost for fixed stock options and warrants ismeasured as the excess, if any, of the quoted market price of the Company’sstock at the date of the grant over the amount a director or employee must payto acquire the stock.  Pro forma resultsas if the Company had adopted the cost recognition provisions of SFAS Nos. 148and 123 are presented below:

 
| ** **                                                                                       | ** ** | **Three Months Ended June 30,**      | ** ** |
|--------------------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                                                                       | ** ** | **2005**                                  | ** ** | **2004** | ** ** |
| ** **                                                                                       | ** ** | **(in thousands, except per share data)** | ** ** |
|                                                                                             |       |                                      |       |   |   |
| Net loss, as  reported                                                                           |       | $                                         | (3,892     | ) | $ | (3,531 | ) |
| Add:                                                                                             |       |                                      |       |   |   |
| Total compensation  cost included in reported net loss, net of $0 tax                            |       | —                                    |       | — |   |
| Deduct:                                                                                          |       |                                      |       |   |   |
| Total  compensation cost determined under fair value based method for all awards,  net of $0 tax |       | (114                                      | )          | (13 | ) |
|                                                                                             |       |                                      |       |   |   |
| Pro forma net  loss                                                                              |       | $                                         | (4,006     | ) | $ | (3,544 | ) |
| Loss per share                                                                                   |       |                                      |       |   |   |
| Basic and  diluted—as reported                                                              |       | $                                         | (.09       | ) | $ | (.09 | ) |
| Basic and  diluted—pro forma                                                                |       | $                                         | (.10       | ) | $ | (.09 | ) |

 

6

----

 
| ** **                                                                                       | ** ** | **Six Months Ended June 30,**        | ** ** |
|--------------------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                                                                       | ** ** | **2005**                                  | ** ** | **2004** | ** ** |
| ** **                                                                                       | ** ** | **(in thousands, except per share data)** | ** ** |
|                                                                                             |       |                                      |       |   |   |
| Net loss, as  reported                                                                           |       | $                                         | (7,553     | ) | $ | (7,957 | ) |
| Add:                                                                                             |       |                                      |       |   |   |
| Total  compensation cost included in reported net loss, net of $0 tax                            |       | —                                    |       | — |   |
| Deduct:                                                                                          |       |                                      |       |   |   |
| Total  compensation cost determined under fair value based method for all awards,  net of $0 tax |       | (231                                      | )          | (29 | ) |
|                                                                                             |       |                                      |       |   |   |
| Pro forma net  loss                                                                              |       | $                                         | (7,784     | ) | $ | (7,986 | ) |
| Loss per share                                                                                   |       |                                      |       |   |   |
| Basic and  diluted—as reported                                                              |       | $                                         | (.18       | ) | $ | (.20 | ) |
| Basic and  diluted—pro forma                                                                |       | $                                         | (.19       | ) | $ | (.20 | ) |

 

ForeignCurrency

 

The functional currencyof TOGA is the Australian dollar. As the functional currency is the localcurrency, the current rate method is used to translate TOGA’s Australian dollarfinancial statements into U.S. dollars. All assets and liabilities aretranslated using current exchange rates, while revenues and expenses aretranslated at rates in existence when the transactions occurred. Thetranslation adjustment that results from using varying rates in the translationprocess is reported as a component of other comprehensive income (loss) and isaccumulated and reported as a separate component of stockholders’ equity in theCompany’s Consolidated Financial Statements.

 

The cumulative foreigncurrency translation adjustment (net of $0 tax because of the Company’s netoperating loss carryforwards) as of June 30, 2005 and December 31,2004 totaled $7.3 million and $7.8 million, respectively.

 

#### Liquidity and Operations

 

In July 2005, theCompany’s majority shareholder, Slough Estates USA Inc. (“Slough”), sold all ofits ownership interest in the Company. Santos International Holdings Pty Ltd (“Santos”) acquired Slough’sownership interest and assumed Slough’s commitment to provide funding to theCompany.  The Company anticipates fundingoperations and capital expenditures in Australia and the United States for 2005using (a) cash on hand at June 30, 2005, (b) net gas revenues, (c) approximately$18 million ($23 million AUD) in available long-term borrowings fromthe Company’s Australian senior credit facility and (d) a commitment fromSantos to provide funds for operations, working capital and board-approvedcapital expenditures through April 2006.

 

The Company anticipateshaving sufficient production history from its Frenchman and Republican projectwells by late 2005 to allow the Company to support a limited amount ofborrowing for further development of these projects or partial repayment ofexisting Santos debt. In order to fund discretionary United States capitalexpenditures in 2005 in excess of these cash resources, the Company anticipatesthat it will require alternative sources of capital. Additional sources offunding may include additional debt financings and asset sales.  However, in the event that sufficient fundingcannot be obtained, the Company will be required to curtail plannedexpenditures and may have to sell additional acreage and/or relinquish acreage.

 

7

----

 

**NOTE 2 - RELATED PARTY TRANSACTIONS**

 

At June 30, 2005, the Company owed Slough and Slough TradingEstate Limited (“STEL”), a United Kingdom company that is the parent of Slough,$22.4 million.  In July 2005, Santosacquired Slough’s ownership interest in the Company and under the terms of theacquisition agreement, its parent company, Santos Limited, has assumed Sloughand STEL’s debt and guarantee arrangements with the Company.  Santos plans to acquire the remainder ofoutstanding shares in the Company early in the 4th quarter of 2005(See Note 10).

 

As of June 30, 2005,the Company had one credit facility agreement with STEL, subsequently withSantos, with an outstanding balance of $13.0 million. No additional funds maycurrently be borrowed under this facility. The Company may repay the loan in whole or in part without prepaymentpenalties.  The credit facility bearsinterest at 13% per annum and is due April 2, 2012.  Santos may demand repayment prior to thematurity date on 18-months notice. So long as the Santos indebtedness exists, the Company may not obtainany additional third party indebtedness, either secured or unsecured, or make apriority payment on any obligation, without first obtaining written approvalfrom Santos.

 

In 2002 and in the first sixmonths of 2005, the Company borrowed $4 million and $5.4 million,respectively, from Slough which is evidenced by a note payable dated May 13,2005 that bears interest at LIBOR plus 3.5% (6.64% as of June 30, 2005)and is payable to Santos in full on April 30, 2006.

 

Santos Limited hasassumed Slough’s obligation to guarantee, for a period up to five years throughJune 2009, the Company’s $150.0 million AUD bank credit facility thatclosed in June 2004.  Asconsideration for the guarantee, the Company pays 1% per annum to SantosLimited on the daily outstanding balance of the debt guaranteed.  For the three-month period ended June 30,2005, the Company paid guarantee fees of $230,000 to Slough.

 

For the three monthperiods ended June 30, 2005 and 2004, approximately $545,000 and $2.3million, respectively, in interest and fees were paid collectively to Sloughand STEL under the financing agreements discussed herein.

 

Santos has committed toprovide funds to the Company in the form of long-term loans or equitycontributions through April 2006 to be used for operations, workingcapital and board-approved capital expenditures.

 

**NOTE3—COMET RIDGE PROJECT FINANCING**

 

OnJune 9, 2004, TOGA entered into a $150.0 million AUD senior creditfacility agreement comprised of a recourse portion and a non-recourse portionwith two major Australian financial institutions for the purpose of paying infull TOGA’s borrowings of $100.0 million AUD from STEL and to fund TOGA’soperations and its share of development costs of the Comet Ridge coalseam gasproject in Queensland, Australia.  Fundsfrom the facility are expected to be available over five years and repayable invariable portions beginning in 2007 and concluding in 2014.  The interest rate for the facility (6.60% perannum as of June 30, 2005) varies with the Australian inter-bank rate plusother factors.  Commitment fees of 0.425%per annum of committed but undrawn funds, as defined by the credit facility,are payable semi-annually.  The facilityis collateralized by, among other things, TOGA’s common stock and virtually allof the Company’s consolidated interest in the Comet Ridge project and isguaranteed through June 9, 2009 by Santos. The facility contains certain restrictive covenants, includingmaintenance of certain ratios. While Santos’ parent Santos Limited is guaranteeingthe full debt, as Slough was at June 30, 2005, the Company’s covenantobligations relate primarily to reporting requirements.  At June 30, 2005, the Company had metall required covenants.  When all or aportion of the debt is no longer guaranteed, the Company will be obligated tomaintain certain financial ratios in addition to the current reportingrequirement covenants.  The U.S. dollarvalue of the outstanding balance of this facility as of June 30, 2005 wasapproximately $95.7 million (approximately $125 million AUD), includinginterest due which will be paid with funds borrowed from the facility of $1.3million (approximately $1.7 million AUD). TOGA incurred approximately $5.0 million in debt issuance costs on thisfacility, which TOGA has deferred and is amortizing over five years. TOGA hasaccrued an additional $683,000 for the present value of deferred underwritingfees to be paid by June 9, 2009. These costs relate to future loan underwriting fees the Company will payupon conversion of the senior credit facility from recourse to non-recoursedebt.  During the six-month period ended June 30,2005, TOGA incurred interest and commitment fees of approximately $3.0 millionand $47,000, respectively on this facility which includes $1.3 million ofaccrued interest to the principal of this facility.

 

8

----

 

**NOTE 4 - LOSS PER SHARE**

 

The following table sets forth the computation of basic and dilutedloss per share (“EPS”) (in thousands except per share data):

 

 
| ** **                                                                             | ** ** | **Three Months Ended  June 30,** | ** ** |
|----------------------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                                             | ** ** | **2005**                              | ** ** | **2004** | ** ** |
| ** **                                                                             | ** ** | ** **                            | ** ** | ** ** | ** ** |
| Numerator:                                                                             | ** ** | ** **                            | ** ** | ** ** | ** ** |
|                                                                                   |       |                                  |       |   |   |
| Net loss                                                                               |       | $                                     | (3,892     | ) | $ | (3,531 | ) |
|                                                                                   |       |                                  |       |   |   |
| Denominator:                                                                           |       |                                  |       |   |   |
| Weighted-average  shares outstanding                                                   |       | 41,365                                |       | 39,325 |   |
| Effect of  dilutive securities:                                                        |       |                                  |       |   |   |
| Assumed exercise  of dilutive options and warrants                                     |       | —                                |       | — |   |
| Weighted-average  shares and dilutive potential common shares                          |       | 41,365                                |       | 39,325 |   |
|                                                                                   |       |                                  |       |   |   |
| Basic and  diluted loss per share                                                      |       | $                                     | (.09       | ) | $ | (.09 | ) |
|                                                                                   |       |                                  |       |   |   |
| Total options  and warrants which could potentially dilute basic EPS in future periods |       | 3,854                                 |       | 3,518 |   |

 
| ** **                                                                             | ** ** | **Six Months Ended  June 30,** | ** ** |
|----------------------------------------------------------------------------------------|------------|-------------------------------------|------------|
| ** **                                                                             | ** ** | **2005**                            | ** ** | **2004** | ** ** |
|                                                                                   |       |                                |       |   |   |
| Numerator:                                                                             |       |                                |       |   |   |
|                                                                                   |       |                                |       |   |   |
| Net loss                                                                               |       | $                                   | (7,553     | ) | $ | (7,957 | ) |
|                                                                                   |       |                                |       |   |   |
| Denominator:                                                                           |       |                                |       |   |   |
| Weighted-average  shares outstanding                                                   |       | 41,361                              |       | 39,308 |   |
| Effect of  dilutive securities:                                                        |       |                                |       |   |   |
| Assumed exercise  of dilutive options and warrants                                     |       | —                              |       | — |   |
| Weighted-average  shares and dilutive potential common shares                          |       | 41,361                              |       | 39,308 |   |
|                                                                                   |       |                                |       |   |   |
| Basic and  diluted loss per share                                                      |       | $                                   | (.18       | ) | $ | (.20 | ) |
|                                                                                   |       |                                |       |   |   |
| Total options  and warrants which could potentially dilute basic EPS in future periods |       | 3,854                               |       | 3,518 |   |

 

9

----

 

**NOTE 5 –MINORITY INTEREST IN TOGA**

 

For the six months ended June 30, 2005, the 10% minority interestshare of TOGA’s net loss totaled $417,000. As the minority interest in TOGA’s net equity (excluding the cumulative foreigncurrency translation adjustment), at December 31, 2004 was zero, theCompany recognized 100% of TOGA’s net loss for the six months ended June 30,2005.  The Company will continuerecognizing 100% of TOGA’s net losses until TOGA becomes profitable.  The Company will record 100% of TOGA’s netincome until it has recouped the minority interest’s share of TOGA’s net losses.  Such share totaled $1.2 million at June 30,2005.

 

**NOTE 6 - COMMITMENTS AND CONTINGENCIES**

 

The Company’s business activitiesare subject to federal, state and local environmental laws and regulations aswell as similar laws and regulations in the Commonwealth of Australia and theState of Queensland, Australia. In the fourth quarter of 2003, the Queenslandgovernment notified the Company that exploration and production of gas fromunder national park lands would be limited to using surface facilities locatedoutside the parks, subject to changes in the national park boundaries in thevertical plane allowing for horizontal drilling.  If gas reserves are discovered under parklands, they would be recovered to the extent possible using directionaldrilling from drill sites adjacent to park lands. Directional drilling is currentlyused to produce some coalseam and conventional gas in the U.S. and Australia.  Management believes the technique can be usedeffectively at Comet Ridge to recover a substantial portion of any reservesthat ultimately would have been recoverable from drilling within theparks.  During the first six months of2005, the Company has drilled two horizontal wells and is evaluating theeffectiveness of the drilling.  Managementdoes not expect these new requirements to significantly increase futureexploration, development and operating costs per Mcf sold. Three of the Company’sproductive wells and one ATP 526 exploration well were previously permitted onpark lands. Under current government policy, the four wells are to be pluggedand abandoned, and the surface area reclaimed at an estimated cost to the Companyof $100,000. The Company expects to recover these wells’ reserves usingdirectional drilling. The amount of any reserves that may ultimately bedetermined to be under park lands is not currently known. The Company willcontinue to monitor environmental compliance. There can be no assurance thatenvironmental laws and regulations will not become more stringent in the futureor that the Company will not incur significant costs in the future to complywith such laws and regulations.

 

The Company is subject tovarious other possible contingencies which arise primarily from interpretationof federal and state laws and regulations affecting the oil and gas industry.Although management believes it has complied with the various laws andregulations, administrative rulings and interpretations thereof, additionalcosts could be incurred as new interpretations and regulations are issued.

 

10

----

 

**NOTE 7 - OPERATIONS BY GEOGRAPHIC AREA**

 

Segment information has been prepared in accordance with SFAS No. 131,“Disclosures About Segments of an Enterprise and Related Information.”  The Company has two geographic reportingsegments, Australia and the United States. General and administrative expense, interest expense, interest and otherincome and other expense are not allocated to segments.  The Company’s Chief Executive Officer, orprimary decision maker, reviews management reports in the segments as presentedin the tables below.  The segment datapresented below was prepared on the same basis as the Company’s ConsolidatedFinancial Statements.  Reportablebusiness segment information as of June 30, 2005 and 2004, and for thethree and six months ended June 30, 2005 and 2004 is as follows (inthousands):

 

**As of and for the three months ended June 30,2005**

 
| ** **                          | ** ** | **Gas and Oil Operations** | ** ** | **Non-**           | ** ** | ** ** | ** ** |
|-------------------------------------|------------|----------------------------|------------|--------------------|------------|------------|------------|
| ** **                          | ** ** | **Australia**              | ** ** | **United  States** | ** ** | **Total**  | ** ** | **Segmented Items****(1)** | ** ** | **Total** | ** ** |
| Revenues                            |       | $                          | 2,992      |               | $          | 207        |       | $ | 3,199 |   | $ | — |   | $ | 3,199 |   |
| Income (loss)  before income taxes  |       | $                          | 382        |               | $          | (131       | )          | $ | 251 |   | $ | (4,143 | ) | $ | (3,892 | ) |
| Property, plant  and equipment, net |       | $                          | 133,472    |               | $          | 14,597     |       | $ | 148,069 |   | $ | 517 |   | $ | 148,586 |   |
| Total assets                        |       | $                          | 136,275    |               | $          | 15,215     |       | $ | 151,490 |   | $ | 5,207 |   | $ | 156,697 |   |

 

----

(1)  Lossbefore income taxes for non-segmented items includes $1.7 million of generaland administrative expenses, $49,000 of corporate depreciation and $2.3 millionof interest expense.  Property, plant andequipment, net, includes $517,000 of corporate office equipment, computerhardware and software.  In addition tocorporate property, plant and equipment, total assets include debt issuancecosts of $4.7 million.

 

**As of and for the three months ended June 30,2004**

 
| ** **                          | ** ** | **Gas and Oil Operations** | ** ** | **Non-**           | ** ** | ** ** | ** ** |
|-------------------------------------|------------|----------------------------|------------|--------------------|------------|------------|------------|
| ** **                          | ** ** | **Australia**              | ** ** | **United  States** | ** ** | **Total**  | ** ** | **Segmented  Items****(1)** | ** ** | **Total** | ** ** |
| ** **                          | ** ** | ** **                 | ** ** | ** **         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenues                            |       | $                          | 1,560      |               | $          | 2          |       | $ | 1,562 |   | $ | — |   | $ | 1,562 |   |
| Income (loss)  before income taxes  |       | $                          | 188        |               | $          | (224       | )          | $ | (36 | ) | $ | (3,558 | ) | $ | (3,594 | ) |
| Property, plant  and equipment, net |       | $                          | 108,036    |               | $          | 8,466      |       | $ | 116,502 |   | $ | 401 |   | $ | 116,903 |   |
| Total assetsq                       |       | $                          | 111,612    |               | $          | 8,590      |       | $ | 120,202 |   | $ | 4,461 |   | $ | 124,663 |   |

 

----

(1)  Lossbefore income taxes for non-segmented items includes $1.5 million of generaland administrative expenses and $2.1 million of interest expense.  Property, plant and equipment, net, includes$401,000 of corporate office equipment, computer hardware and software.  In addition to corporate property, plant andequipment, total assets include debt issuance costs of $4.1 million.

 

11

----

 

**As of and for the six months ended June 30,2005**

 
| ** **                          | ** ** | **Gas and Oil Operations** | ** ** | **Non-**          | ** ** | ** ** | ** ** |
|-------------------------------------|------------|----------------------------|------------|-------------------|------------|------------|------------|
| ** **                          | ** ** | **Australia**              | ** ** | **United States** | ** ** | **Total**  | ** ** | **Segmented  Items(1)** | ** ** | **Total** | ** ** |
| ** **                          | ** ** | ** **                 | ** ** | ** **        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenues                            |       | $                          | 6,366      |              | $          | 208        |       | $ | 6,574 |   | $ | — |   | $ | 6,574 |   |
| Income (loss)  before income taxes  |       | $                          | 1,526      |              | $          | (526       | )          | $ | 1,000 |   | $ | (8,553 | ) | $ | (7,553 | ) |
| Property, plant  and equipment, net |       | $                          | 133,472    |              | $          | 14,597     |       | $ | 148,069 |   | $ | 517 |   | $ | 148,586 |   |
| Total assets                        |       | $                          | 136,275    |              | $          | 15,215     |       | $ | 151,490 |   | $ | 5,207 |   | $ | 156,697 |   |

 

----

(1)  Lossbefore income taxes for non-segmented items includes $3.9 million of generaland administrative expenses, $97,000 of corporate depreciation and $4.5 millionof interest expense.  Property, plant andequipment, net, includes $517,000 of corporate office equipment, computerhardware and software.  In addition tocorporate property, plant and equipment, total assets include debt issuancecosts of $4.7 million.

 

**As of and for the six months ended June 30,2004**

 
| ** **                          | ** ** | **Gas and Oil Operations** | ** ** | **Non-**          | ** ** | ** ** | ** ** |
|-------------------------------------|------------|----------------------------|------------|-------------------|------------|------------|------------|
| ** **                          | ** ** | **Australia**              | ** ** | **United States** | ** ** | **Total**  | ** ** | **Segmented  Items(1)** | ** ** | **Total** | ** ** |
| ** **                          | ** ** | ** **                 | ** ** | ** **        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenues                            |       | $                          | 2,726      |              | $          | 4          |       | $ | 2,730 |   | $ | — |   | $ | 2,730 |   |
| Loss before  income taxes           |       | $                          | (28        | )                 | $          | (630       | )          | $ | (658 | ) | $ | (7,717 | ) | $ | (8,375 | ) |
| Property, plant  and equipment, net |       | $                          | 108,036    |              | $          | 8,466      |       | $ | 116,502 |   | $ | 401 |   | $ | 116,903 |   |
| Total assets                        |       | $                          | 111,612    |              | $          | 8,590      |       | $ | 120,202 |   | $ | 4,461 |   | $ | 124,663 |   |

 

----

(1)    Loss before income taxes fornon-segmented items includes $3.6 million of general and administrativeexpenses and $4.2 million of interest expense. Property, plant and equipment, net, includes $401,000 of corporate officeequipment, computer hardware and software. In addition to corporate property, plant and equipment, total assetsinclude debt issuance costs of $4.1 million.

 

**NOTE 8– PROPERTY, PLANT AND EQUIPMENT**

 

A summary of property, plant and equipment follows:

 
| ** **                                                     | ** ** | **June 30,  2005** | ** ** | **December  31,2004** | ** ** |
|----------------------------------------------------------------|------------|-------------------------|------------|-----------------------|------------|
| ** **                                                     | ** ** | **(in thousands)**      | ** ** |
| ** **                                                     | ** ** | ** **              | ** ** | ** **            | ** ** |
| Proved and  evaluated oil and gas properties:                  |       |                    |       |                  |       |
| Australian  properties                                         |       | $                       | 128,047    |                  | $          | 121,376 |   |
| Domestic  properties                                           |       | 2,527                   |       | 2,068                 |       |
| Unproved oil and  gas properties (excluded from amortization): |       |                    |       |                  |       |
| Australian  properties                                         |       | 12,997                  |       | 13,236                |       |
| Domestic  properties                                           |       | 12,089                  |       | 8,461                 |       |
| Oil and gas  properties                                        |       | 155,660                 |       | 145,141               |       |
| Other property  and equipment                                  |       | 4,039                   |       | 3,943                 |       |
|                                                           |       | 159,699                 |       | 149,084               |       |
| Less accumulated  depreciation, depletion and amortization     |       | (11,113                 | )          | (9,833                | )          |
| Property, plant  and equipment, net                            |       | $                       | 148,586    |                  | $          | 139,251 |   |

 

12

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**NOTE 9 – STATEMENT OF CASH FLOWS SUPPLEMENTALINFORMATION**

 
| ** **                                                       | ** ** | **Six Months Ended   June 30,** | ** ** |
|------------------------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                                       | ** ** | **2005**                             | ** ** | **2004** | ** ** |
| ** **                                                       | ** ** | **(in thousands)**                   | ** ** |
|                                                             |       |                                 |       |   |   |
| Cash paid during  the period for interest                        |       | $                                    | 3,584      |   | $ | 4,779 |   |
| Non-cash  investing and financing activities—               |       |                                 |       |   |   |
| Net increase in  payables for capital expenditures               |       | $                                    | 2,336      |   | $ | 702 |   |
| Increase in  other long-term liabilities for debt issuance costs |       | $                                    | 670        |   | $ | 36 |   |

 

**NOTE 10 - SUBSEQUENT EVENTS**

 

On July 1, 2005, Santos, a company incorporated in the AustralianCapital Territory, and Slough Estates plc, a United Kingdom public limitedcompany (“Slough Estates”), entered into an Interest Purchase Agreement whichwas amended on July 4, 2005.  Underthe July 4th Amended and Restated Interest Purchase Agreement(the “Amended IPA”), Santos agreed to acquire 100% of the interests in theCompany held by Slough, Slough Estates and STEL.  On July 13, 2005, the parties completedthe closing of the transactions contemplated by the Amended IPA, and Santosacquired the ownership held by Slough of approximately 54% of the outstandingcommon stock of Tipperary Corporation for a purchase price of $7.39 per share,Slough’s warrants for 1,700,000 additional shares of the Company’s commonstock, as well as Slough’s 10% interest in TOGA, and assumed the position ofSlough Estates, Slough and STEL, as creditors, respectively, of theCompany.  Santos’ parent company, SantosLimited, also assumed Slough’s obligations as guarantor of the $150 million AUDsenior credit facility referenced to in Note 4. The aggregate purchase price for the Company common stock and othersecurities and interests purchased by Santos under the Amended IPA wasapproximately $222,710,273, and was paid entirely in cash.

 

On July 1, 2005, the Company and Santos entered into an Agreementand Plan of Merger which was amended on July 4, 2005.  Under the July 4th Amendedand Restated Agreement and Plan of Merger (the “Amended Merger Agreement”), theCompany agreed to merge with Santos Acquisition Co., a Texas Corporation thatis a wholly owned subsidiary of Santos, pending approval by the Company’sshareholders at a special meeting to be called to vote on the merger.  If the merger is approved, Santos willacquire all of the Company’s outstanding stock that it does not already own for$7.43 per share in cash.

 

On July 13, 2005, upon change of control of the Company, certainemployees became eligible for a 35% stay on bonus to be paid on September 30,2005 unless terminated with cause prior to that date.  The Company expects to record approximately$800,000 for the 35% stay on bonus in the third quarter of 2005.

 

In July 2005, the Company paid Houlihan Lokey Howard & Zukin$500,000 for a July 3, 2005 written fairness opinion related to theSantos-Tipperary merger.  These fees willbe expensed in the third quarter of 2005.

 

If Tipperary shareholders approve the merger and if Santos closes themerger with arrangements to buy the minority interests at $7.43 per share, thenthe Company will be obligated to pay a $6 million investment banking commissionto Houlihan at closing.  Section 4.19 ofthe Amended Merger Agreement provides that the fee will not be deducted fromthe $7.43 per share in payments to the minority shareholders.  It further provides that if Tipperary doesnot have the funds to pay the fee, Santos will pay the fee.  Santos has indicated orally it will advancefunds to Tipperary rather than Santos paying the fee directly.  Since the $6 million fee is contingent onsuccessful merger closing and has not been earned at June 30, no portion of itis accrued at June 30, 2005.

 

Through the Santos acquisition of Slough’s ownership in the Company Santoshas acquired warrants for 1,700,000 shares of Company common stock at anexercise cost of $3,900,000.  In August2005 Santos indicated to the Company that it plans to exercise those warrantsin late August.

 

13

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**Item 2.    Management’s Discussion and Analysis of Financial Condition andResults of Operations**

 

Information within this report contains forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of 1995 thatare based on management’s beliefs, assumptions, current expectations, estimatesand projections about the oil and gas industry, the world economy and about theCompany itself.  Words such as “may,” “will,”“expect,” “anticipate,” “estimate” or “continue,” or comparable words areintended to identify such forward-looking statements. In addition, allstatements other than statements of historical facts that address activitiesthat we expect or anticipate will or may occur in the future areforward-looking statements.  Thesestatements are not guarantees of future performance and involve certain risks,uncertainties and assumptions that are difficult to predict with regard totiming, extent, likelihood and degree of occurrence.  Therefore, actual results and outcomes maymaterially differ from what may be expressed or forecasted in suchforward-looking statements. Furthermore, we undertake no obligation to update,amend or clarify forward-looking statements, whether as a result of newinformation, future events or otherwise. Readers are encouraged to read our SECfilings, particularly our Form 10-K for the year ended December 31,2004, for meaningful cautionary language and discussion of risk factors disclosingwhy actual results may vary materially from those anticipated by management.

 

***Santos Transaction***

 

The historical financial condition and results of operations through June 30,2005, are subject to the subsequent events described below:

 

On July 1, 2005, Santos, a company incorporated in the AustralianCapital Territory, and Slough Estates plc, a United Kingdom public limitedcompany (“Slough Estates”), entered into an Interest Purchase Agreement whichwas amended on July 4, 2005. Under the July 4th Amended and RestatedInterest Purchase Agreement (the “Amended IPA”), Santos agreed to acquire 100%of the interests in the Company held by Slough, Slough Estates and STEL. Inconnection with this transaction the Tipperary board of directors received afairness opinion for which Tipperary paid $500,000 in late July 2005.  On July 13, 2005, the parties completedthe closing of the transactions contemplated by the Amended IPA, and Santosacquired the ownership of approximately 54% of the outstanding common stock ofTipperary Corporation held by Slough for a purchase price of $7.39 per share,as well as Slough’s 10% interest in TOGA, and assumed the position of SloughEstates, Slough and STEL, as guarantor and creditors, respectively, of theCompany.  Santos’ parent company, SantosLimited, also assumed Slough’s obligation as guarantor of the $150 million AUDsenior credit facility referenced to in Note 4. The aggregate purchase price for the Company common stock and othersecurities and interests purchased by Santos under the Amended IPA wasapproximately $222,710,273, and was paid entirely in cash.

 

On July 1, 2005, the Company and Santos entered into an Agreementand Plan of Merger which was amended on July 4, 2005.  Under the July 4th Amended and RestatedAgreement and Plan of Merger (the “Amended Merger Agreement”), the Companyagreed to merge with Santos Acquisition Co., a Texas Corporation that is awholly owned subsidiary of Santos, pending approval by the Company’sshareholders at a special meeting to be called to vote on the merger.  If the merger is approved, Santos willacquire all of the Company’s outstanding stock that it does not already own for$7.43 per share in cash.  Approvalrequires that shareholders owning at least 66.7% of the outstanding stock votein favor of the merger.  Upon successfulcompletion of the merger the Company’s investment banker, Houlihan, Lokey,Howard & Zukin will receive $6 million in commission fees.  Section 4.19 of the Amended MergerAgreement requires that Santos pay the commission fees if Tipperary is unableto do so.  The minority shareholders ofthe Company have no obligation to pay these commission fees.

 

Management anticipates that the meeting of shareholders will be held inOctober 2005. The definitive date of the meeting will be set forth in a Schedule 14AProxy Statement (“Proxy”) to be mailed to all shareholders of record prior tothe meeting date with at least 10 days notice. On August 11, 2005, the Company filed a preliminary proxy with theSEC.

 

14

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***Overview***

 

*Australia*

 

Our activities in Australia are conducted substantially through our90%-owned Australian subsidiary, Tipperary Oil & Gas (Australia) PtyLtd (“TOGA”).  As of June 30, 2005,Tipperary owned a 75.25% undivided capital-bearing interest in the Comet Ridgeproject in Queensland, Australia.  Ofthis interest, TOGA holds 65% and other Tipperary entities hold 10.25%.  This project comprises approximately1,230,500 acres in the Bowen Basin, which includes five petroleum leases (“PL”)covering approximately 287,500 acres, Authority to Prospect (“ATP”) 526covering approximately 712,000 acres, ATP 653 covering approximately 96,000acres and ATP 745 covering approximately 135,000 acres.  We also hold 100% of ATP 655, which is nearthe Comet Ridge project and covers approximately 77,000 acres.

 

An ATP allows the holder to undertake a range of explorationactivities, including geophysical surveys, field mapping and exploratorydrilling. Each ATP requires the expenditure of an amount of exploration costsas determined by Queensland’s Department of Natural Resources and Mines (“QueenslandDNRM”) and is generally subject to renewal every four years. Once a petroleumresource is identified, the holder of an ATP may apply for a petroleum lease,which provides the lessee with the ability to conduct additional exploration,development and production activities.

 

Upon expiration of an ATP,legislation and policy of the Queensland DNRM allow the ATP holder to apply torenew the ATP for an additional four year period.  ATP 526 was renewedeffective November 1, 2004 for another four year exploration term,expiring on October 31, 2008.  No relinquishment was required at thetime of renewal, however a series of relinquishments are mandatory during thecurrent term. Recent changes to legislation have changed several fundamentalaspects of ATP management, especially those concerning relinquishment and theability to vary conditions of an ATP.  These changes have also resulted inTipperary’s acreage being administered under different Acts.  ATP 526, andall the petroleum leases, are administered under the Petroleum Act 1923 asbefore, except that the Act has been substantially amended effective December 31,2004.  ATPs 653, 655 and 745, which have initial terms expiring on September 30,2006, October 31, 2007 and October 31, 2007, respectively, are nowadministered under the Petroleum and Gas (Production and Safety) Act 2004,which was enacted on December 31, 2004.  These ATPs can be renewedfor up to a 12 year period under the new Act.

 

With respect to ATP 653, we filed and received a variance to combineyear two expenditure requirements with those of year three and to drill ahorizontal well, eliminating the obligation to drill two conventional wells. Thehorizontal well was partially drilled in January 2005, and we anticipatedrilling operations to continue in late 2005. We have completed expenditure requirements for ATPs 745 and 655.  The terms of the ATP 526 renewal do notrequire exploration expenditures during 2005.

 

Our gas marketing in easternAustralia has been primarily focused on obtaining long-term gas salesagreements that provide five to 15 years of firm sales typically starting in2006 to 2008.  However, short-term salescontracts have recently been utilized and are being pursued.  During 2004, our Australian natural gas saleswere made to four purchasers under various short and long-term contracts.  We are under contract to provide gas volumesto the same four purchasers in 2005.

 

The following tables summarize gross gas production by quarter and wellstatus on the Comet Ridge project as of June 30, 2005.  We are expanding the capacity of our meteringequipment, compressors and facilities to a sales capacity of approximately 45MMcf per day.  We expect the capacityexpansion project to be completed by October 2005.

 

15

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**Comet Ridge Operations Review**

 
| ** **                              | ** ** | **For the Quarter Ended**    | ** ** |
|-----------------------------------------|------------|------------------------------|------------|
| ** **                              | ** ** | **September 30,  2004** | ** ** | **December 31,  2004** | ** ** | **March 31,  2005** | ** ** | **June 30,  2005** | ** ** |
| ** **                              | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Gross  Average Daily Volumes (MMCF)** |       |                         |       |   |   |   |   |   |   |
| Sold                                    |       | 23                           |       | 28 |   | 28 |   | 27 |   |
| Flared                                  |       | 2                            |       | 1 |   | 1 |   | 2 |   |
| Used for  compression fuel              |       | 3                            |       | 3 |   | 3 |   | 3 |   |
| Produced                                |       | 28                           |       | 32 |   | 32 |   | 32 |   |

** **
| ** **                         | ** ** | **Number of Wells  At June 30,  2005** | ** ** |
|------------------------------------|------------|---------------------------------------------|------------|
| ** **                         | ** ** | ** **                                  | ** ** |
| **Well  Status**                   |       |                                        |       |
| Selling                            |       | 58                                          |       |
| Dewatering or  temporarily shut-in |       | 26                                          |       |
| Producing                          |       | 84                                          |       |
| Being evaluated                    |       | 13                                          |       |
| Injection/monitoring  wells        |       | 5                                           |       |
| To be plugged  and abandoned       |       | 3                                           |       |
| Plugged and  abandoned             |       | 3                                           |       |
| Total drilled                      |       | 108                                         |       |

 

We drilled one exploratory and two development wells on the Comet Ridgeproject during the first six months of 2005. Two of these wells were drilled horizontally.  The horizontal development well wassuccessfully completed, and it tested over one million cubic feet of gas perday.  This well is expected to be workedover in the coming weeks as gas production has unexpectedly declined since theinitial production tests.  Drilling ofthe horizontal exploratory well was interrupted by difficulties encounteredwhile drilling.  We expect this well willbe re-entered in late 2005.  The 2005drilling was substantially funded with borrowings from our Australian bankcredit facility.

 

We believe that currentand anticipated development drilling programs on the Comet Ridge project willenable us to satisfy our gas supply delivery commitments, although this cannotbe assured.

 

*United States*

 

Our assets in the UnitedStates consist primarily of natural gas exploration and development leaseholdsin Colorado and Nebraska, which are described below by project area.  The four projects in eastern Colorado and westernNebraska principally target conventional, natural gas in the Niobraraformation.

 

*Frenchman* — Wehold a 25% interest in 159,000 acres and 100% in 3,000 acres in the Frenchmanproject in eastern Colorado.  The HoustonExploration Company (“Houston Exploration”) holds the remaining 75% interest inthe 159,000 acres and is the operator of that portion of the acreage.  As of August 1, 2005, we have drilled atotal of 14 wells on the project.  Wehave successfully completed eleven wells in the 100%-owned area of the projectand anticipate we will drill six additional 100%-owned wells in 2005 at a costto us of approximately $1,200,000.  In February 2005,we completed a gas gathering system at a cost of approximately $350,000.  Our June 2005 net sales volumes wereapproximately 900 Mcf per day.  Currentnet gas sales are approximately 1.4 MMcf per day and we expect net sales volumesto increase to 1.6 MMcf in the near term.

 

16

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*Republican* — We hold a 20%interest in the Republican project in eastern Colorado.  Total gross acreage in this projectapproximates 170,000 acres. Houston Exploration holds the remaining 80%interest and is the operator of the project. Through August 8, 2005, a total of 67 wells have been drilled onthe project of which 44 wells were completed, 13 wells are scheduled forcompletion, one was drilled as a salt water disposal well and nine were pluggedand abandoned.  In the first six monthsof 2005, we participated with Houston Exploration in a 3D seismic programcovering 99,000 gross acres at a net cost to us of $726,000.  As a result of that survey and drillingsuccess on the Republican project, we may participate in drilling up to 250wells by the end of 2006.  Gas salesbegan on the Republican project in late July 2005 at 1.0 MMcf per day.

 

*Lay Creek* — Wehold a 50% working interest in Lay Creek, a coalseam gas project in westernColorado. The project includes various leasehold interests covering over 92,000gross acres. Koch Exploration Company (“Koch”) holds the remaining 50% workinginterest and operates the project.  Weare currently evaluating the gas and water production from pilot wells in orderto determine economic viability of the production.  We are also showing the acreage to othercompanies which may have an interest in participating in future drilling.

 

*Stateline* — We hold a 25%interest in the Stateline project in western Nebraska.  Total gross acreage in the project isapproximately 113,000 acres.  Lance Oil &Gas Company, Inc. (“Lance”) holds the remaining 75% interest and is theoperator of the project.  In the firsthalf of 2004, preliminary 2-D seismic operations were conducted at a costto us of approximately $100,000.  Theacquisition of 3D seismic data began in February 2005 at a cost to us ofapproximately $160,000.  We haveidentified drill sites through the seismic evaluation and anticipate drillingwill begin in the fourth quarter of 2005.

 

*Sand Hill* — During late 2003, weacquired leasehold acreage in western Nebraska totaling approximately 51,000gross acres, called the “Sand Hill” project. This acreage is located in the vicinity of our Frenchman, Republican andStateline projects. We currently hold 100% of the acreage but may sell aninterest to an industry partner. Alternatively, we may elect to explore and develop this projectindependently.  During the fourth quarterof 2004, we conducted limited 2-D seismic operations on the Sand Hillproject and are currently evaluating those results.

 

***Financial Condition, Liquidity and Capital Resources***

 

We had cash and cash equivalents of $447,000 as of June 30, 2005,compared to approximately $3.7 million as of December 31, 2004.  We have funded operations and capitalexpenditures for the six months ended June 30, 2005, using primarily (a) $3.7million of cash on hand at December 31, 2004, (b) borrowings from ourAustralian senior credit facility and (c) borrowings from Slough.

 

In July 2005, theCompany’s majority shareholder, Slough, sold all of its ownership interest inthe Company.  Santos acquired Slough’sownership interest and assumed Slough’s commitment to provide funding to theCompany.  We anticipate fundingoperations and capital expenditures in Australia and the United States for 2005using (a) cash on hand at June 30, 2005, (b) net gas revenues, (c) approximately$18 million ($23 million AUD) in available long term borrowings from ourAustralian senior credit facility and (d) a commitment from Santos toprovide funds for operations, working capital, and board-approved capitalexpenditures through April 2006. Through the Santos acquisition of Slough’s ownership in the CompanySantos has acquired warrants for 1,700,000 shares of Company common stock at anexercise cost of $3,900,000.  In August2005 Santos indicated to the Company that it plans to exercise those warrantsin late August.

 

We anticipate havingsufficient production history from our Frenchman and Republican project wellsby late 2005 to be able to borrow against these assets.  In order to fund discretionary United Statescapital expenditures in 2005 in excess of these cash resources, we anticipatethat we will require alternative sources of capital. Additional sources offunding may include additional debt financings and asset sales.  However, in the event that sufficient fundingcannot be obtained, we will be required to curtail planned expenditures and mayhave to sell additional acreage and/or relinquish acreage.

 

17

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Net cash used by operating activities was $3.8 million during the sixmonths ended June 30, 2005, compared to $7.1 million of cash used duringthe same period last year.  The decreasein net cash used for operations in the first six months of 2005 compared withthe same period in 2004 resulted primarily from higher gas revenues.

 

The table below provides an analysis of cash used for capitalexpenditures during the six months ended June 30, 2005.

 

**CapitalExpenditures Activity**

**(inthousands)**

 
| Australia:                                    |   |   |   |
|-----------------------------------------------|--------|--------|--------|
| Comet Ridge  drilling and completion          |   | $      | 4,100  |   |
| Comet Ridge  facilities and equipment         |   | 2,005  |   |
| ATP 655  exploration                          |   | 301    |   |
| Other                                         |   | 242    |   |
| United States:                                |   |   |   |
| Republican  drilling and completion           |   | 980    |   |
| Frenchman  facilities, equipment and drilling |   | 837    |   |
| Seismic and  leasehold acquisition            |   | 979    |   |
| Other                                         |   | 388    |   |
|                                          |   |   |   |
| Total                                         |   | $      | 9,832  |   |

 

Included within the first six months of 2005 capital spending was $467,000of capitalized interest expense associated with our Australian and UnitedStates properties.  Australian and UnitedStates capital expenditures for the first six months of 2005 were fundedprincipally under (a) TOGA’s credit facility with Australian financialinstitutions and (b) borrowing from Slough, respectively.

 

During the first six months of 2004, capital spending totaled $9.4million with approximately $7.0 million in capital spending in Australia andthe remainder in the United States. Capital expenditures for the first six months of 2004 were fundedprincipally under TOGA’s credit facility and borrowings from Slough.

 

The Company has variouscommitments in addition to its long-term debt. The following table summarizes the Company’s contractual obligations at June 30,2005 (in thousands):

 
| **Contractual Obligation**         | ** ** | **Total**  | ** ** | **2005**   | ** ** | **2006**   | ** ** | **2007**   | ** ** | **2008**   | ** ** | **Thereafter** | ** ** |
|------------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|----------------|------------|
| ** **                         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **     | ** ** |
| Long-term debt(1)                  |       | $          | 118,117    |       | $          | —     |       | $          | 9,400      |       | $          | —         |       | $ | — |   | $ | 108,717 |   |
| Interest(2)                        |       | $          | 55,680     |       | $          | 4,316      |       | $          | 8,320      |       | $          | 8,428          |       | $ | 8,640 |   | $ | 25,976 |   |
| Operating leases  for office space |       | $          | 1,439      |       | $          | 181        |       | $          | 365        |       | $          | 372            |       | $ | 247 |   | $ | 274 |   |
| Operating leases  for equipment    |       | $          | 7,311      |       | $          | 857        |       | $          | 1,735      |       | $          | 1,697          |       | $ | 1,619 |   | $ | 1,403 |   |
| Petroleum lease  expenditures(3)   |       | $          | 2,035      |       | $          | 935        |       | $          | 550        |       | $          | 275            |       | $ | 275 |   | $ | — |   |

 

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(1)          Senior credit facilityand debt payable to Slough and STEL.

(2)          Based on June 30,2005 weighted average interest rate of 6.60% and anticipated debt repayment.

(3)          Petroleum leaseexpenditures can be reduced or eliminated by governmental royalties paid on gassales.

 

18

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***Results of Operations - Comparison of the Three Months Ended June 30,2005 and 2004***

 

We incurred a net loss of approximately $3.9 million for the threemonths ended June 30, 2005 compared to a net loss of approximately $3.5million for the three months ended June 30, 2004.  Higher gas revenues in 2005 weresubstantially offset by higher operating costs and depreciation, depletion andamortization.  The table below provides acomparison of operations for the three months ended June 30, 2005 withthose of the prior year’s three months. The table is intended to provide a comparative review of significantoperational items.  Accordingly, nominaldifferences may exist from the amounts presented in the accompanyingConsolidated Financial Statements. Certain prior period amounts may have been reclassified to ensurecomparability.

 
| ** **                                                       | ** ** | **Three Months Ended  June 30,**                              | ** ** | **Increase** | ** ** | **%****Increase** | ** ** |
|------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|--------------|------------|-------------------|------------|
| ** **                                                       | ** ** | **2005**                                                           | ** ** | **2004**     | ** ** | **(Decrease)**    | ** ** | **(% Decrease)** | ** ** |
| ** **                                                       | ** ** | **($ in thousands, except average per Mcf prices and costs)** | ** ** |
| ** **                                                       | ** ** | ** **                                                         | ** ** | ** **   | ** ** | ** **        | ** ** | ** ** | ** ** |
| **Worldwide  operations:**                                       |       |                                                               |       |         |       |              |       |   |   |
|                                                             |       |                                                               |       |         |       |              |       |   |   |
| Gas revenue                                                      |       | $                                                                  | 3,199      |         | $          | 1,562             |       | $ | 1,637 |   | 105 | % |
| Gas volumes  (MMcf)                                              |       | 1,585                                                              |       | 938          |       | 647               |       | 69 | % |
| Average gas  price per Mcf                                       |       | $                                                                  | 2.02       |         | $          | 1.66              |       | $ | 0.36 |   | 22 | % |
| Operating  expenses                                              |       | $                                                                  | 2,357      |         | $          | 1,247             |       | $ | 1,110 |   | 89 | % |
| Average  operating costs per Mcf sold                            |       | $                                                                  | 1.49       |         | $          | 1.33              |       | $ | .16 |   | 12 | % |
| General and  administrative                                      |       | $                                                                  | 1,749      |         | $          | 1,510             |       | $ | 239 |   | 16 | % |
| Depreciation,  depletion and amortization (“DD&A”) |       | $                                                                  | 666        |         | $          | 356               |       | $ | 310 |   | 87 | % |
| Interest expense                                                 |       | $                                                                  | 2,345      |         | $          | 2,097             |       | $ | 248 |   | 12 | % |
|                                                             |       |                                                               |       |         |       |              |       |   |   |
| **Australia  operations:**                                       |       |                                                               |       |         |       |              |       |   |   |
|                                                             |       |                                                               |       |         |       |              |       |   |   |
| Gas revenue                                                      |       | $                                                                  | 2,992      |         | $          | 1,560             |       | $ | 1,432 |   | 92 | % |
| Gas volumes  (MMcf)                                              |       | 1,551                                                              |       | 938          |       | 613               |       | 65 | % |
| Average gas  price per Mcf                                       |       | $                                                                  | 1.93       |         | $          | 1.66              |       | $ | 0.27 |   | 16 | % |
| Operating  expenses                                              |       | $                                                                  | 2,041      |         | $          | 1,025             |       | $ | 1,016 |   | 99 | % |
| Average  operating costs per Mcf sold                            |       | $                                                                  | 1.32       |         | $          | 1.09              |       | $ | .23 |   | 21 | % |
| Oil and Gas  property DD&A                                   |       | $                                                                  | 600        |         | $          | 308               |       | $ | 292 |   | 95 | % |
| Other DD&A                                                   |       | $                                                                  | 29         |         | $          | 34                |       | $ | (5 | ) | (15 | )% |
| Oil and  Gas DD&A rate per Mcf sold                     |       | $                                                                  | 0.36       |         | $          | 0.33              |       | $ | 0.03 |   | 9 | % |
|                                                             |       |                                                               |       |         |       |              |       |   |   |
| **United  States operations:**                                   |       |                                                               |       |         |       |              |       |   |   |
|                                                             |       |                                                               |       |         |       |              |       |   |   |
| Gas revenue                                                      |       | $                                                                  | 207        |         | $          | 2                 |       | $ | 205 |   | 10,250 | % |
| Gas volumes  (MMcf)                                              |       | 34                                                                 |       | 0.5          |       | 33.5              |       | 6,700 | % |
| Average gas  price per Mcf                                       |       | $                                                                  | 6.09       |         | $          | 4.08              |       | $ | 2.01 |   | 49 | % |
| Operating  expense – producing properties                   |       | $                                                                  | 51         |         | $          | 1                 |       | $ | 50 |   | 5,000 | % |
| Average operating  costs per Mcf sold(1)                         |       | $                                                                  | 1.50       |         | $          | 2.31              |       | $ | (.81 | ) | (35 | )% |
| Operating  expenses – non-producing                         |       | $                                                                  | 265        |         | $          | 221               |       | $ | 44 |   | 20 | % |
| Oil and Gas  property DD&A                                   |       | $                                                                  | 20         |         | $          | —            |       | $ | 20 |   | N/A |   |
| Other DD&A                                                   |       | $                                                                  | 17         |         | $          | 14                |       | $ | 3 |   | 21 | % |

 

----

(1)          Average operating costsper Mcf for the quarter is for our producing properties.  To provide a more meaningful comparison ofoperating costs per Mcf, significant operating costs associated withnon-producing properties in the dewatering stage have been excluded. For June2005 (the first full month of gas sales on the Frenchman project) the averageoperating cost per Mcf sold from producing properties was $0.77.

 

19

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Revenues and Sales Volumes

 

The 105% increase in our operating revenues was primarily due tosignificantly greater sales volumes from our Australian Comet Ridgeproject.  In 2004, Comet Ridge salesvolumes were reduced due to decreased delivery requirements from Energex, oursole customer.

 

During the second quarter of 2005, we had increased United Statesrevenue and volumes from commencing on May 22, 2005 gas sales in ourFrenchman project in Colorado.

 

Costs and Expenses

 

Operating expenses in Australia for 2005 were higher principally due togas transportation costs associated with a significant portion of our gas beingtransported approximately 90 miles from the field prior to sale.  During the second quarter of 2004, our gas wasall sold at the field.  Operatingexpenses in Australia also increased due to increased gas compression and fieldactivity costs associated with significantly greater gas sales volumes.  Australian oil and gas property DD&A increasedby 95% primarily due to increased Comet Ridge sales volumes.

 

United States operating expenses in the second quarter of 2005 and 2004are principally attributable to the Lay Creek coal-seam gas project where thewells are in the dewatering phase.

 

General and administrative (“G&A”) expenses for the second quarterof 2005 increased 16% compared to the second quarter ended June 30, 2004.  The anticipated decline in legal expenses dueto the end of the Tri-Star litigation was offset by higher consulting costsassociated with the sale of Slough’s interest in the Company to Santos andhigher employee costs.

 

Other Income (Expense)

 

Interest expense increased by 12% as the reduced cost associated withlower interest rates obtained under the Australian bank debt were offset byincreased loan balances.

 

20

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***Results of Operations - Comparison of the Six Months Ended June 30,2005 and 2004***

 

We incurred a net loss of approximately $7.6 million for the six monthsended June 30, 2005 compared to a net loss of approximately $8.0 millionfor the six months ended June 30, 2004. The lower net loss for the six months ended June 30, 2005 wasprimarily due to higher gas revenues, partially offset by higher operatingcosts and depreciation, depletion and amortization.  The table below provides a comparison ofoperations for the six months ended June 30, 2005 with those of the prioryear’s six months.  The table is intendedto provide a comparative review of significant operational items.  Accordingly, nominal differences may existfrom the amounts presented in the accompanying Consolidated Financial Statements.  Certain prior period amounts may have beenreclassified to ensure comparability.

 
| ** **                                                       | ** ** | **Six Months Ended  June 30,**                                | ** ** | **Increase** | ** ** | **%****Increase** | ** ** |
|------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|--------------|------------|-------------------|------------|
| ** **                                                       | ** ** | **2005**                                                           | ** ** | **2004**     | ** ** | **(Decrease)**    | ** ** | **(% Decrease)** | ** ** |
| ** **                                                       | ** ** | **($ in thousands, except average per Mcf prices and costs)** | ** ** |
| ** **                                                       | ** ** | ** **                                                         | ** ** | ** **   | ** ** | ** **        | ** ** | ** ** | ** ** |
| **Worldwide  operations:**                                       |       |                                                               |       |         |       |              |       |   |   |
|                                                             |       |                                                               |       |         |       |              |       |   |   |
| Gas revenue                                                      |       | $                                                                  | 6,574      |         | $          | 2,730             |       | $ | 3,844 |   | 141 | % |
| Gas volumes  (MMcf)                                              |       | 3,317                                                              |       | 1,589        |       | 1,728             |       | 109 | % |
| Average gas  price per Mcf                                       |       | $                                                                  | 1.98       |         | $          | 1.72              |       | $ | 0.26 |   | 15 | % |
| Operating  expenses                                              |       | $                                                                  | 4,362      |         | $          | 2,641             |       | $ | 1,721 |   | 65 | % |
| Average  operating costs per Mcf sold                            |       | $                                                                  | 1.32       |         | $          | 1.66              |       | $ | (0.34 | ) | (21 | )% |
| General and  administrative                                      |       | $                                                                  | 3,937      |         | $          | 3,554             |       | $ | 383 |   | 11 | % |
| Depreciation,  depletion and amortization (“DD&A”) |       | $                                                                  | 1,370      |         | $          | 607               |       | $ | 763 |   | 126 | % |
| Impairment of  oil and gas properties                            |       | $                                                                  | —     |         | $          | 150               |       | $ | (150 | ) | (100 | )% |
| Interest expense                                                 |       | $                                                                  | 4,519      |         | $          | 4,233             |       | $ | 286 |   | 7 | % |
|                                                             |       |                                                               |       |         |       |              |       |   |   |
| **Australia  operations:**                                       |       |                                                               |       |         |       |              |       |   |   |
|                                                             |       |                                                               |       |         |       |              |       |   |   |
| Gas revenue                                                      |       | $                                                                  | 6,366      |         | $          | 2,726             |       | $ | 3,640 |   | 134 | % |
| Gas volumes  (MMcf)                                              |       | 3,283                                                              |       | 1,588        |       | 1,695             |       | 107 | % |
| Average gas  price per Mcf                                       |       | $                                                                  | 1.94       |         | $          | 1.72              |       | $ | 0.22 |   | 13 | % |
| Operating  expenses                                              |       | $                                                                  | 3,649      |         | $          | 2,165             |       | $ | 1,484 |   | 69 | % |
| Average  operating costs per Mcf sold                            |       | $                                                                  | 1.11       |         | $          | 1.36              |       | $ | (0.25 | ) | (18 | )% |
| Oil and Gas  property DD&A                                   |       | $                                                                  | 1,253      |         | $          | 510               |       | $ | 743 |   | 146 | % |
| Other DD&A                                                   |       | $                                                                  | 66         |         | $          | 69                |       | $ | (3 | ) | (4 | )% |
| Oil and  Gas DD&A rate per Mcf sold                     |       | $                                                                  | 0.38       |         | $          | 0.32              |       | $ | 0.06 |   | 19 | % |
|                                                             |       |                                                               |       |         |       |              |       |   |   |
| **United  States operations:**                                   |       |                                                               |       |         |       |              |       |   |   |
|                                                             |       |                                                               |       |         |       |              |       |   |   |
| Gas revenue                                                      |       | $                                                                  | 208        |         | $          | 4                 |       | $ | 204 |   | 5,100 | % |
| Gas volumes  (MMcf)                                              |       | 34                                                                 |       | 1            |       | 33                |       | 3,300 | % |
| Average gas  price per Mcf                                       |       | $                                                                  | 6.12       |         | $          | 4.04              |       | $ | 2.08 |   | 51 | % |
| Operating  expenses - producing properties                       |       | $                                                                  | 83         |         | $          | 2                 |       | $ | 81 |   | 4,050 | % |
| Average  operating costs per Mcf sold(1)                         |       | $                                                                  | 2.44       |         | $          | 2.29              |       | $ | .15 |   | 7 | % |
| Operating  expenses - non-producing properties                   |       | $                                                                  | 630        |         | $          | 474               |       | $ | 156 |   | 33 | % |
| Impairment of  oil and gas properties                            |       | $                                                                  | —     |         | $          | 150               |       | $ | (150 | ) | (100 | )% |
| Oil and Gas  property DD&A                                   |       | $                                                                  | 20         |         | $          | —            |       | $ | 20 |   | N/A |   |
| Other DD&A                                                   |       | $                                                                  | 31         |         | $          | 28                |       | $ | 3 |   | 11 | % |

 

----

(1)          Average operating costsper Mcf for the six months is for our producing properties.  To provide a more meaningful comparison ofoperating costs per Mcf, significant operating costs associated withnon-producing properties in the dewatering stage have been excluded.. For June2005 (the first full month of gas sales on the Frenchman project) the averageoperating cost per Mcf sold from producing properties was $0.77.

 

21

----

 

Revenues and Sales Volumes

 

The 141% increase in our operating revenues was primarily due tosignificantly greater sales volumes from our Australian Comet Ridgeproject.  In 2004, Comet Ridge salesvolumes were reduced due to decreased delivery requirements from Energex, oursole customer.

 

During the first six months of 2005, we had increased United Statesrevenue and volumes from commencing on May 22, 2005 gas sales in ourFrenchman project in Colorado.

 

Costs and Expenses

 

Operating expenses in Australia for 2005 were higher principally due togas transportation costs associated with a significant portion of our 2005 gassales being transported approximately 90 miles from the field prior to sale.  During the first six months of 2004, our gas wasall sold in the field.  Operatingexpenses in Australia also increased due to increased gas compression and fieldactivity costs associated with significantly greater gas sales volumes.  Australian oil and gas property DD&Aincreased by 146% primarily due to increased Comet Ridge sales volumes.

 

United States operating expenses for the first six months of 2005 and2004 are principally attributable to the Lay Creek coal-seam gas project wherethe wells are in the dewatering phase.

 

The impairment expense of $150,000 in 2004 was attributed tounsuccessful exploration costs incurred on wells on the Frenchman prospect.

 

General and administrative (“G&A”) expenses for the first sixmonths of 2005 increased 11% compared to the first six months ended June 30,2004.  The anticipated decline in legalexpenses due to the end of the Tri-Star litigation was offset by higherconsulting costs associated with the sale of slough’s interest in the Companyto Santos and higher employee costs.

 

Other Income (Expense)

 

Interest expense increased by 7% as the reduced cost associated withlower interest rates obtained under the Australian bank debt were offset byincreased loan balances.

 

**Item 3.    Quantitative and Qualitative Disclosure About Market Risk**

 

Market risk is the potential loss arising from adverse changes inmarket rates and prices, such as foreign currency exchange, interest rates andcommodity prices.  We do not usefinancial instruments to any degree to manage foreign currency, interest rateor commodity risk and do not hold or issue financial instruments to any degreefor trading purposes. Our Australian debt facility and a portion of our debtpayable to Slough have variable interest rates. Fluctuations in the interest rate could increase or decrease ourinterest expense.  At June 30, 2005,we had approximately $105 million in outstanding variable rate debt.  If the interest rate for our variable ratedebt increased or decreased by 1%, our annual interest expense would increaseor decrease by approximately $1.0 million. In addition, at June 30, 2005, we were exposed to some market riskwith respect to foreign currency and natural gas prices; however, managementdoes not believe such risk to be material.

 

22

----

 

**Item 4.  Controls and Procedures**

 

As of the end of theperiod covered by this report, we evaluated, under the supervision and with theparticipation of our management, including our Chief Executive Officer andChief Financial Officer, the effectiveness of the design and operation of ourdisclosure controls and procedures over financial reporting pursuant to Rule 13a-15and 15d-15 of the Securities Exchange Act of 1934. Based upon thatevaluation, our Chief Executive Officer and our Chief Financial Officerconcluded that our disclosure controls and procedures over financial reportingare adequate and effective at the reasonable assurance level in timely alertingthem to material information required to be included in this quarterly reporton Form 10-Q.

 

Disclosure controls and procedures, no matter how well designed andimplemented, can provide only reasonable assurance of achieving an entity’sdisclosure objectives. The likelihood of achieving such objectives is affectedby limitations inherent in disclosure controls and procedures. Theselimitations include the fact that human judgment in decision-making can be faultyand that breakdowns in internal control can occur because of human failuressuch as simple errors or mistakes or because of intentional circumvention ofthe established process.

 

During the period covered by this report, there have been no changes inour internal controls over financial reporting or in other factors, which couldsignificantly affect internal controls over financial reporting.

 

23

----

 

**PART II - OTHER INFORMATION**

 

Item 1.    Legal Proceedings

 

No material proceedings.

 

Item 2.  Unregistered Sales of Equity Securities andUse of Proceeds

 

None.

 

Item 6.    Exhibits

 

The following exhibits are filed herewith:

 
| **Numbers** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|-------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 3.1         |       | Restated Articles of  Incorporation of Tipperary Corporation adopted May 6, 1993, originally  filed as Exhibit 3.9 to Amendment No. 1 to Registration Statement  on Form S-1 filed with the Commission on June 29, 1993, and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 3.2         |       | Restated Corporate  Bylaws of Tipperary Corporation adopted June 28, 1993, originally filed  as Exhibit 3.10 to Amendment No. 1 to Registration Statement on  Form S-1 filed with the Commission on June 29, 1993, and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 3.3         |       | Articles of Amendment  of the Articles of Incorporation of Tipperary Corporation adopted  January 25, 2000, originally filed as Exhibit 3.11 to Form 10-QSB  for the quarterly period ended December 31, 1999, and incorporated  herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.1         |       | Credit Facility  Agreement dated March 21, 2003 for AUD$27.5 million between  Tipperary Oil & Gas (Australia) Pty Ltd (ACN 077536871), the  borrower, Tipperary Corporation, the Guarantor and Slough Trading Estate  Limited, the lender, originally filed as Exhibit 4.77 to Form 10-Q  for the quarterly period ended March 31, 2003, and incorporated herein  by reference.                                                                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.2         |       | Credit Facility  Agreement dated March 21, 2003 for U.S.$8.5 million between  Tipperary Corporation, the borrower and Slough Trading Estate Limited, the  lender, originally filed as Exhibit 4.78 to Form 10-Q for the  quarterly period ended March 31, 2003, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                          |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.4         |       | Promissory Note dated  March 15, 2005, in the amount of $5.0 million issued by Tipperary  Corporation to Slough Estates USA Inc., filed as Exhibit 4.4 to Form 10-K  filed with the Commission on March 24, 2005, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.5         |       | Letters of Variation  dated November 25, 2003, July 2, 2004, August 3, 2004 and  September 3, 2004, increasing the amount borrowed from Slough Trading  Estate Limited from U.S. $8.5 million to U.S. $13.0 million related to the  Credit Facility Agreement dated march 21, 2003, for U.S. $8.5 million,  filed as Exhibit 4.5 to Form 10-K filed with the Commission  on March 24, 2005, and incorporated herein by reference.                                                                                                                                                                                                                                |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.6         |       | Comet Ridge Project  Facilities Agreement and related agreements dated June 9, 2004,  including the Comet Ridge Project TOGA/TCSG Deed of Security of which a  portion on Page 59 of this agreement noted by “***” has been omitted  pursuant to a request for confidential treatment, and such material has been  filed separately with the Securities and Exchange Commission under  Rule 246-2 of the Securities Exchange Act of 1934. Agreements  originally filed as Exhibits 4.79(a), 4.79(b), 4.79(c), 4.79(d), 4.79(e),  4.79(f), 4.79(g) and 4.79(h) to Form 8-k filed with the  Commission on June 30, 2004 and incorporated herein by reference. |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.7         |       | Stock Purchase  Agreement dated September 20, 2004, including the Registration Rights  Agreement originally filed as Exhibit 4.79 to Form 8-K filed  with the Commission on September 24, 2004 and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                |

 

24

----

 
| **Numbers** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.8         |       | Promissory note for  $9.4 million dated May 13, 2005 to Slough Estates USA Inc., filed as  Exhibit 4.8 to Form 8-K on May 18, 2005, and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 4.9         |       | Promissory note for  $11.4 million dated August 1, 2005 to Santos International Holdings Pty  ltd, filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.1        |       | Tipperary Corporation  1997 Long-Term Incentive Plan filed as Exhibit A to the Proxy Statement  for its Annual Meeting of Shareholders held on January 28, 1997,  originally filed as Exhibit 10.51 to Form 10-Q dated  December 31, 1996, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                          |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.2        |       | Warrant to Purchase  common stock dated December 22, 1998, issued to Slough Estates USA Inc.,  originally filed as Exhibit 10.58 to Form 10-Q for the  quarterly period ended December 31, 1998, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.3        |       | Warrant to Purchase  common stock dated December 23, 1999, issued to Slough Estates USA Inc.,  originally filed as Exhibit 10.60 to Form 10-QSB for the  quarterly period ended December 31, 1999, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                      |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.4        |       | Warrant to Purchase  common stock dated February 9, 2000, issued to James H. Marshall,  originally filed as Exhibit 10.70 to Form 10-QSB for the  quarterly period ended March 31, 2000, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                                |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.5        |       | Warrant to Purchase  common stock dated February 9, 2000, issued to James F. Knott,  originally filed as Exhibit 10.71 to Form 10-QSB for the  quarterly period ended March 31, 2000, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                                   |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.6        |       | Gas Supply Agreement  between Tipperary Oil & Gas (Australia) Pty Ltd (ACN 077 536 871)  and Energex Retail Pty Ltd (ACN 078 849 055) dated June 23, 2000.  Confidential portions of this agreement noted by “***” have been omitted and  filed separately with the Securities and Exchange Commission pursuant to a  request for confidentiality under Rule 24b-2 of the Securities  Exchange Act of 1934, originally filed as Exhibit 10.76 to Form 10-QSB  for the quarterly period ended June 30, 2000, and incorporated herein by  reference.                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.7        |       | Warrant to Purchase  common stock dated May 3, 2000, issued to Charles T. Maxwell, originally  filed as Exhibit 10.77 to Form 10-KSB(A) for the  transition period ended December 31, 2000, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.8        |       | Warrant to Purchase  common stock dated November 30, 2000, issued to D. Leroy Sample,  originally filed as Exhibit 10.79 to Form 10-KSB(A) for  the transition period ended December 31, 2000, and incorporated herein  by reference.                                                                                                                                                                                                                                                                                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.9        |       | Purchase and Sale  Agreement dated May 4, 2001, by and between Tipperary Oil & Gas  Corporation and Koch Exploration Company, originally filed as  Exhibit 10.80 to Form S-3, SEC File No. 333-59052,  filed with the Commission on July 26, 2001, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.10       |       | Gas Sales Agreement  between Tipperary Oil & Gas (Australia) Pty Ltd (ACN 077 536 871) as  Seller and Queensland Fertilizer Assets Limited (ACN 011 062 294) as Buyer,  dated September 28, 2001. Confidential portions of this agreement noted  by “***” have been omitted and filed separately with the Securities and  Exchange Commission pursuant to a request for confidentiality under  Rule 24b-2 of the Securities Exchange Act of 1934, originally  filed as Exhibit 10.81 to Form 8-K filed with the Commission  on October 18, 2001, and incorporated herein by reference. |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.11       |       | Employment Agreement  dated September 18, 2001 between Tipperary Corporation and David L.  Bradshaw, originally filed as Exhibit 10.82 to Form 8-K filed  with the Commission on October 18, 2001, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                      |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.12       |       | Warrant to Purchase common  stock dated January 30, 2002, issued to Jeff T. Obourn, originally filed  as Exhibit 10.83 to Form 10-KSB for the year ended  December 31, 2001, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                             |

 

25

----

 
| **Numbers** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.13       |       | First Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated May 30, 2002, originally filed as Exhibit 10.87  to Form 10-QSB for the quarterly period ended June 30, 2002,  and incorporated herein by reference.                                                                                                                                                                                                                                                                      |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.14       |       | Second Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated September 1, 2002, originally filed as  Exhibit 10.88 to Form 10-QSB for the quarterly period ended  September 30, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                           |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.15       |       | Agreement by Tipperary  Oil and Gas (Australia) to provide portion of funds to allow Mitchell  Drilling Contractors Pty Ltd. (Mitchell) to purchase a new Soilmec Rig, enter  into drilling contract with Mitchell and extend agreement for hire with  Mitchell, dated October 7, 2002, originally filed as Exhibit 10.89  to Form 10-QSB for the quarterly period ended September 30,  2002, and incorporated herein by reference.                                                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.16       |       | Purchase and Sale  agreement dated November 27, 2002, between Tipperary Oil & Gas  Corporation as Seller and Kerr-McGee Rocky Mountain Corporation as Buyer,  originally filed as Exhibit 10.90 to Form 8-K filed with the  Commission on December 12, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                         |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.17       |       | Third Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated January 1, 2003, originally filed as  Exhibit 10.91 to Form 10-KSB for the year ended  December 31, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                           |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.18       |       | Gas Supply Term Sheet  between Tipperary Oil & Gas (Australia) Pty Ltd (ABN 46 077 536 871)  as Seller and Origin Energy Retail Limited (ABN 22 078 868 425) as Buyer,  dated December 12, 2002. Confidential portions of this agreement noted  by an “*” have been omitted and filed separately with the Securities and  Exchange Commission pursuant to a request for confidentiality under  Rule 24b-2 of the Securities Exchange Act of 1934, originally  filed as Exhibit 10.92 to Form 10-KSB for the year ended  December 31, 2002, and incorporated herein by reference.                            |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.19       |       | Warrant to Purchase  common stock dated February 3, 2003, issued to Jeff T. Obourn,  originally filed as Exhibit 10.93 to Form 10-KSB for the year  ended December 31, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                  |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.20       |       | Warrant to Purchase  common stock dated February 3, 2003, issued to David L. Bradshaw,  originally filed as Exhibit 10.94 to Form 10-KSB for the year  ended December 31, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                               |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.21       |       | Warrant to Purchase  common stock dated February 3, 2003, issued to Kenneth L. Ancell,  originally filed as Exhibit 10.95 to Form 10-KSB for the year  ended December 31, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                               |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.22       |       | Employment Agreement  dated October 17, 2002, between Tipperary Corporation and Kenneth L.  Ancell, originally filed as Exhibit 10.96 to Form 10-KSB for  the year ended December 31, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                   |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.23       |       | Fourth Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated March 31, 2003, originally filed as  Exhibit 10.97 to Form 10-Q for the quarterly period ended  June 30, 2003, and incorporated herein by reference.                                                                                                                                                                                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.24       |       | Fifth Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated June 30, 2003. Confidential portions of this  agreement noted by an “*” have been omitted and filed separately with the  Securities and Exchange Commission pursuant to a request for confidentiality  under Rule 24b-2 of the Securities Exchange Act of 1934,  originally filed as Exhibit 10.98 to Form 10-Q for the  quarterly period ended September 30, 2003, and incorporated herein by  reference. |

 

26

----

 
| **Numbers** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.25       |       | Sixth Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated December 31, 2003, originally filed as  Exhibit 10.99 to Form 10-K for the year ended  December 31, 2003, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                  |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.26       |       | Seventh Amendment to  Gas Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd  (ACN 077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011  062 294) as Buyer, dated March 31, 2004, originally filed as Exhibit 10.98  to Form 10-Q for the quarterly period ended March 31, 2004,  and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                          |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.27       |       | Settlement  Agreement & Mutual Release dated October 30, 2004, between  Tipperary Corporation and Tri-Star Petroleum, originally filed as  Exhibit 10.101 to Form 8K filed with Commission on November 4,  2004, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.28       |       | Eighth Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated September 30, 2004, filed as Exhibit 10.28 to  Form 10-K filed with the Commission on March 24, 2005 and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.29       |       | Extension to Gas Supply  Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ABN 46  077 536 871) as Seller and Energex Retail Pty ltd (ABN 97 078 849 055) as  Buyer, dated December 16, 2004, disclosed on Form 8-K filed  with the Commission on December 23, 2004. Confidential portions of this  agreement noted by an “***” have been omitted and filed separately with the  Securities and Exchange Commission pursuant to a request for confidentiality  under Rule 24b-2 of the Securities Exchange Act of 1934, filed as  Exhibit 10.29 to Form 10-K filed with the Commission on March 24,  2005 and incorporated herein by reference. |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.30       |       | Gas Supply Agreement  between Tipperary Oil & Gas (Australia) Pty Ltd (ABN 46 077 536 871)  as Seller and Orica Australia Pty Ltd (ABN 99 004 117 828) as Buyer, dated  December 23, 2004, disclosed on Form 8-K filed with the  Commission on December 23, 2004. Confidential portions of this agreement  noted by an “***” have been omitted and filed separately with the Securities  and Exchange Commission pursuant to a request for confidentiality under  Rule 24b-2 of the Securities Exchange Act of 1934, filed as  Exhibit 10.30 to Form 10-K filed with the Commission on  March 24, 2005, and incorporated herein by reference.            |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.31       |       | Gas Supply Agreement  between Tipperary Oil & Gas (Australia) Pty Ltd (ABN 46 077 536 871)  as Seller and Santos QNT Pty Ltd (ABN 33 083 077 196) as Buyer, dated  December 30, 2004, disclosed on Form 8-K filed with the  Commission on January 4, 2005. Confidential portions of this agreement  noted by an “***” have been omitted and filed separately with the Securities  and Exchange Commission pursuant to a request for confidentiality under  Rule 24b-2 of the Securities Exchange Act of 1934, filed as  Exhibit 10.31 to Form 10-K filed with the Commission on  March 24, 2005, and incorporated herein by reference.                   |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.32       |       | Extension to Employment  Agreement, between Tipperary Corporation and Jeff T. Obourn, dated  January 6, 2005 and related Employment Agreement dated January 17,  2002, disclosed on Form 8-K filed with the Commission on  January 12, 2005, filed as Exhibit 10.32 to Form 10-K  filed with the Commission on March 24, 2005, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.33       |       | Financial Advisory and  Investment Banking Services Agreement between Tipperary Corporation and  Houlihan Lokey Howard & Zukin Capital, Inc., dated  February 22, 2005, disclosed on Form 8-K filed with the  Commission on February 25, 2005, filed as Exhibit 10.33 to  Form 10-K filed with the Commission on March 24, 2005, and  incorporated herein by reference.                                                                                                                                                                                                                                                                                            |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.34       |       | Ninth Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated December 31, 2004, filed as Exhibit 10.34 to  Form 10-K filed with the Commission on March 24, 2005, and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                      |

 

27

----

 
| **Numbers** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.35       |       | Warrants to purchase  common stock dated January 10, 2005 and approved April 26, 2005 and  disclosed in Current Report on 8-K filed on April 29, 2005.  Warrants issued to Kenneth L. Ancell, David L. Bradshaw, Jeff T. Obourn,  Eugene I. Davis, Douglas Kramer, Charles T. Maxwell and D. Leroy Sample and  filed as Exhibit 10.35 to Form 10-Q filed with the Commission  on May 16, 2005, and incorporated herein by reference. |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.36       |       | Change in control  severance agreements approved April 25, 2005 and disclosed in Current  Report on 8-K filed on April 29, 2005. Agreements with David L.  Bradshaw, Kenneth L. Ancell, Jeff T. Obourn and Joseph Feiten and filed as  Exhibit 10.36 to Form 10-Q filed with the Commission on  May 16, 2005, and incorporated herein by reference.                                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.37       |       | Agreement and Plan of  Merger between Tipperary Corporation and Santos International Holdings Pty  Ltd and Santos Acquisition Co. and filed as Exhibit 10.37 to Form 8-K  on July 8, 2005.                                                                                                                                                                                                                                                          |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.38       |       | Amended and Restated  Agreement and Plan of Merger between Tipperary Corporation and Santos  International Holding Pty Ltd and Santos Acquisition Co and filed as Exhibit 10.38  to Form 8-K on July 8, 2005.                                                                                                                                                                                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.39       |       | Amended Change in  Control Severance Agreements approved June 3, 2005 and disclosed in  Current Report on Form 8-K filed on June 9, 2005. Agreements  with David L. Bradshaw, Kenneth L. Ancell, Jeff T. Obourn and Joseph Feiten  and filed herewith.                                                                                                                                                                                              |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 31.1        |       | Certification of Chief  Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 31.2        |       | Certification of Chief  Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 32.1        |       | Certification of Chief  Executive Officer of Tipperary Corporation Pursuant to 18 U.S.C. §1350.                                                                                                                                                                                                                                                                                                                                                               |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 32.2        |       | Certification of Chief  Financial Officer of Tipperary Corporation Pursuant to 18 U.S.C. §1350.                                                                                                                                                                                                                                                                                                                                                               |

 

28

----

 

**SIGNATURES**

 

Pursuant to the requirements of the Securities Exchange Act of 1934,the Registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

 
|   |                 |   | Tipperary Corporation                                  |   |
|--------|----------------------|--------|--------------------------------------------------------|--------|
|   |                 |   | Registrant                                             |
|   |                 |   |                                                   |
|   |                 |   |                                                   |
| Date:  | August 15, 2005 | By:    | /s/ David L. Bradshaw                                  |   |
|   |                 |   | David L. Bradshaw, President, Chief Executive  Officer |
|   |                 |   | and Chairman of the Board of Directors                 |
|   |                 |   |                                                   |
|   |                 |   |                                                   |
| Date:  | August 15, 2005 | By:    | /s/ Joseph B. Feiten                                   |   |
|   |                 |   | Joseph B. Feiten, Chief Financial Officer and          |
|   |                 |   | Principal Accounting Officer                           |

 

29

----

 

**EXHIBIT INDEX**

 
| **Numbers** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|-------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.1         |       | Restated Articles of  Incorporation of Tipperary Corporation adopted May 6, 1993, originally  filed as Exhibit 3.9 to Amendment No. 1 to Registration Statement  on Form S-1 filed with the Commission on June 29, 1993, and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 3.2         |       | Restated Corporate  Bylaws of Tipperary Corporation adopted June 28, 1993, originally filed  as Exhibit 3.10 to Amendment No. 1 to Registration Statement on  Form S-1 filed with the Commission on June 29, 1993, and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 3.3         |       | Articles of Amendment  of the Articles of Incorporation of Tipperary Corporation adopted  January 25, 2000, originally filed as Exhibit 3.11 to Form 10-QSB  for the quarterly period ended December 31, 1999, and incorporated  herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.1         |       | Credit Facility  Agreement dated March 21, 2003 for AUD$27.5 million between  Tipperary Oil & Gas (Australia) Pty Ltd (ACN 077536871), the  borrower, Tipperary Corporation, the Guarantor and Slough Trading Estate  Limited, the lender, originally filed as Exhibit 4.77 to Form 10-Q  for the quarterly period ended March 31, 2003, and incorporated herein  by reference.                                                                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.2         |       | Credit Facility  Agreement dated March 21, 2003 for U.S.$8.5 million between  Tipperary Corporation, the borrower and Slough Trading Estate Limited, the  lender, originally filed as Exhibit 4.78 to Form 10-Q for the  quarterly period ended March 31, 2003, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                          |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.4         |       | Promissory Note dated  March 15, 2005, in the amount of $5.0 million issued by Tipperary  Corporation to Slough Estates USA Inc., filed as Exhibit 4.4 to  Form 10-K filed with the Commission on March 24, 2005, and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.5         |       | Letters of Variation  dated November 25, 2003, July 2, 2004, August 3, 2004 and  September 3, 2004, increasing the amount borrowed from Slough Trading  Estate Limited from U.S. $8.5 million to U.S. $13.0 million related to the  Credit Facility Agreement dated march 21, 2003, for U.S. $8.5 million,  filed as Exhibit 4.5 to Form 10-K filed with the Commission  on March 24, 2005, and incorporated herein by reference.                                                                                                                                                                                                                                |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.6         |       | Comet Ridge Project  Facilities Agreement and related agreements dated June 9, 2004,  including the Comet Ridge Project TOGA/TCSG Deed of Security of which a  portion on Page 59 of this agreement noted by “***” has been omitted  pursuant to a request for confidential treatment, and such material has been  filed separately with the Securities and Exchange Commission under  Rule 246-2 of the Securities Exchange Act of 1934. Agreements  originally filed as Exhibits 4.79(a), 4.79(b), 4.79(c), 4.79(d), 4.79(e),  4.79(f), 4.79(g) and 4.79(h) to Form 8-k filed with the  Commission on June 30, 2004 and incorporated herein by reference. |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.7         |       | Stock Purchase  Agreement dated September 20, 2004, including the Registration Rights  Agreement originally filed as Exhibit 4.79 to Form 8-K filed  with the Commission on September 24, 2004 and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.8         |       | Promissory note for  $9.4 million dated May 13, 2005 to Slough Estates USA Inc., filed as  Exhibit 4.8 to Form 8-K on May 18, 2005, and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.9         |       | Promissory note for  $11.4 million dated August 1, 2005 to Santos International Holdings Pty  ltd, filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.1        |       | Tipperary Corporation  1997 Long-Term Incentive Plan filed as Exhibit A to the Proxy Statement  for its Annual Meeting of Shareholders held on January 28, 1997, originally  filed as Exhibit 10.51 to Form 10-Q dated December 31,  1996, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.2        |       | Warrant to Purchase  common stock dated December 22, 1998, issued to Slough Estates USA Inc.,  originally filed as Exhibit 10.58 to Form 10-Q for the  quarterly period ended December 31, 1998, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                                                                                              |

 

30

----

 

 
| **Numbers** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.3        |       | Warrant to Purchase  common stock dated December 23, 1999, issued to Slough Estates USA Inc.,  originally filed as Exhibit 10.60 to Form 10-QSB for the  quarterly period ended December 31, 1999, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                      |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.4        |       | Warrant to Purchase  common stock dated February 9, 2000, issued to James H. Marshall, originally  filed as Exhibit 10.70 to Form 10-QSB for the quarterly  period ended March 31, 2000, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.5        |       | Warrant to Purchase  common stock dated February 9, 2000, issued to James F. Knott,  originally filed as Exhibit 10.71 to Form 10-QSB for the  quarterly period ended March 31, 2000, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                                   |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.6        |       | Gas Supply Agreement  between Tipperary Oil & Gas (Australia) Pty Ltd (ACN 077 536 871)  and Energex Retail Pty Ltd (ACN 078 849 055) dated June 23, 2000.  Confidential portions of this agreement noted by “***” have been omitted and  filed separately with the Securities and Exchange Commission pursuant to a  request for confidentiality under Rule 24b-2 of the Securities  Exchange Act of 1934, originally filed as Exhibit 10.76 to Form 10-QSB  for the quarterly period ended June 30, 2000, and incorporated herein by  reference.                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.7        |       | Warrant to Purchase  common stock dated May 3, 2000, issued to Charles T. Maxwell, originally  filed as Exhibit 10.77 to Form 10-KSB(A) for the  transition period ended December 31, 2000, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.8        |       | Warrant to Purchase  common stock dated November 30, 2000, issued to D. Leroy Sample,  originally filed as Exhibit 10.79 to Form 10-KSB(A) for  the transition period ended December 31, 2000, and incorporated herein  by reference.                                                                                                                                                                                                                                                                                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.9        |       | Purchase and Sale  Agreement dated May 4, 2001, by and between Tipperary Oil & Gas  Corporation and Koch Exploration Company, originally filed as  Exhibit 10.80 to Form S-3, SEC File No. 333-59052,  filed with the Commission on July 26, 2001, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.10       |       | Gas Sales Agreement  between Tipperary Oil & Gas (Australia) Pty Ltd (ACN 077 536 871) as  Seller and Queensland Fertilizer Assets Limited (ACN 011 062 294) as Buyer,  dated September 28, 2001. Confidential portions of this agreement noted  by “***” have been omitted and filed separately with the Securities and  Exchange Commission pursuant to a request for confidentiality under Rule 24b-2  of the Securities Exchange Act of 1934, originally filed as  Exhibit 10.81 to Form 8-K filed with the Commission on  October 18, 2001, and incorporated herein by reference. |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.11       |       | Employment Agreement  dated September 18, 2001 between Tipperary Corporation and David L.  Bradshaw, originally filed as Exhibit 10.82 to Form 8-K filed  with the Commission on October 18, 2001, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                                                                                      |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.12       |       | Warrant to Purchase  common stock dated January 30, 2002, issued to Jeff T. Obourn, originally  filed as Exhibit 10.83 to Form 10-KSB for the year ended  December 31, 2001, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                             |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.13       |       | First Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated May 30, 2002, originally filed as  Exhibit 10.87 to Form 10-QSB for the quarterly period ended  June 30, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.14       |       | Second Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated September 1, 2002, originally filed as  Exhibit 10.88 to Form 10-QSB for the quarterly period ended  September 30, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                      |

 

31

----

 
| **Numbers** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.15       |       | Agreement by Tipperary  Oil and Gas (Australia) to provide portion of funds to allow Mitchell  Drilling Contractors Pty Ltd. (Mitchell) to purchase a new Soilmec Rig, enter  into drilling contract with Mitchell and extend agreement for hire with  Mitchell, dated October 7, 2002, originally filed as Exhibit 10.89  to Form 10-QSB for the quarterly period ended September 30,  2002, and incorporated herein by reference.                                                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.16       |       | Purchase and Sale  agreement dated November 27, 2002, between Tipperary Oil & Gas  Corporation as Seller and Kerr-McGee Rocky Mountain Corporation as Buyer,  originally filed as Exhibit 10.90 to Form 8-K filed with the  Commission on December 12, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                         |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.17       |       | Third Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated January 1, 2003, originally filed as  Exhibit 10.91 to Form 10-KSB for the year ended  December 31, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                           |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.18       |       | Gas Supply Term Sheet  between Tipperary Oil & Gas (Australia) Pty Ltd (ABN 46 077 536 871)  as Seller and Origin Energy Retail Limited (ABN 22 078 868 425) as Buyer,  dated December 12, 2002. Confidential portions of this agreement noted  by an “*” have been omitted and filed separately with the Securities and Exchange  Commission pursuant to a request for confidentiality under Rule 24b-2  of the Securities Exchange Act of 1934, originally filed as  Exhibit 10.92 to Form 10-KSB for the year ended  December 31, 2002, and incorporated herein by reference.                            |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.19       |       | Warrant to Purchase  common stock dated February 3, 2003, issued to Jeff T. Obourn,  originally filed as Exhibit 10.93 to Form 10-KSB for the year  ended December 31, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                  |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.20       |       | Warrant to Purchase  common stock dated February 3, 2003, issued to David L. Bradshaw,  originally filed as Exhibit 10.94 to Form 10-KSB for the year  ended December 31, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                               |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.21       |       | Warrant to Purchase  common stock dated February 3, 2003, issued to Kenneth L. Ancell,  originally filed as Exhibit 10.95 to Form 10-KSB for the year  ended December 31, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                               |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.22       |       | Employment Agreement  dated October 17, 2002, between Tipperary Corporation and Kenneth L.  Ancell, originally filed as Exhibit 10.96 to Form 10-KSB for  the year ended December 31, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                   |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.23       |       | Fourth Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated March 31, 2003, originally filed as  Exhibit 10.97 to Form 10-Q for the quarterly period ended  June 30, 2003, and incorporated herein by reference.                                                                                                                                                                                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.24       |       | Fifth Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated June 30, 2003. Confidential portions of this  agreement noted by an “*” have been omitted and filed separately with the  Securities and Exchange Commission pursuant to a request for confidentiality  under Rule 24b-2 of the Securities Exchange Act of 1934,  originally filed as Exhibit 10.98 to Form 10-Q for the  quarterly period ended September 30, 2003, and incorporated herein by  reference. |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.25       |       | Sixth Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated December 31, 2003, originally filed as  Exhibit 10.99 to Form 10-K for the year ended  December 31, 2003, and incorporated herein by reference.                                                                                                                                                                                                                                                                           |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.26       |       | Seventh Amendment to  Gas Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd  (ACN 077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011  062 294) as Buyer, dated March 31, 2004, originally filed as  Exhibit 10.98 to Form 10-Q for the quarterly period ended  March 31, 2004, and incorporated herein by reference.                                                                                                                                                                                                                                                                   |

 

32

----

 
| **Numbers** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.27       |       | Settlement  Agreement & Mutual Release dated October 30, 2004, between  Tipperary Corporation and Tri-Star Petroleum, originally filed as  Exhibit 10.101 to Form 8K filed with Commission on November 4,  2004, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.28       |       | Eighth Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated September 30, 2004, filed as Exhibit 10.28 to  Form 10-K filed with the Commission on March 24, 2005 and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.29       |       | Extension to Gas Supply  Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ABN 46  077 536 871) as Seller and Energex Retail Pty ltd (ABN 97 078 849 055) as  Buyer, dated December 16, 2004, disclosed on Form 8-K filed  with the Commission on December 23, 2004. Confidential portions of this  agreement noted by an “***” have been omitted and filed separately with the  Securities and Exchange Commission pursuant to a request for confidentiality  under Rule 24b-2 of the Securities Exchange Act of 1934, filed as  Exhibit 10.29 to Form 10-K filed with the Commission on  March 24, 2005 and incorporated herein by reference. |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.30       |       | Gas Supply Agreement  between Tipperary Oil & Gas (Australia) Pty Ltd (ABN 46 077 536 871)  as Seller and Orica Australia Pty Ltd (ABN 99 004 117 828) as Buyer, dated  December 23, 2004, disclosed on Form 8-K filed with the  Commission on December 23, 2004. Confidential portions of this agreement  noted by an “***” have been omitted and filed separately with the Securities  and Exchange Commission pursuant to a request for confidentiality under  Rule 24b-2 of the Securities Exchange Act of 1934, filed as  Exhibit 10.30 to Form 10-K filed with the Commission on  March 24, 2005, and incorporated herein by reference.            |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.31       |       | Gas Supply Agreement  between Tipperary Oil & Gas (Australia) Pty Ltd (ABN 46 077 536 871)  as Seller and Santos QNT Pty Ltd (ABN 33 083 077 196) as Buyer, dated  December 30, 2004, disclosed on Form 8-K filed with the  Commission on January 4, 2005. Confidential portions of this agreement  noted by an “***” have been omitted and filed separately with the Securities  and Exchange Commission pursuant to a request for confidentiality under  Rule 24b-2 of the Securities Exchange Act of 1934, filed as  Exhibit 10.31 to Form 10-K filed with the Commission on  March 24, 2005, and incorporated herein by reference.                   |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.32       |       | Extension to Employment  Agreement, between Tipperary Corporation and Jeff T. Obourn, dated  January 6, 2005 and related Employment Agreement dated January 17,  2002, disclosed on Form 8-K filed with the Commission on  January 12, 2005, filed as Exhibit 10.32 to Form 10-K  filed with the Commission on March 24, 2005, and incorporated herein by  reference.                                                                                                                                                                                                                                                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.33       |       | Financial Advisory and  Investment Banking Services Agreement between Tipperary Corporation and  Houlihan Lokey Howard & Zukin Capital, Inc., dated  February 22, 2005, disclosed on Form 8-K filed with the  Commission on February 25, 2005, filed as Exhibit 10.33 to  Form 10-K filed with the Commission on March 24, 2005, and  incorporated herein by reference.                                                                                                                                                                                                                                                                                            |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.34       |       | Ninth Amendment to Gas  Sales Agreement between Tipperary Oil & Gas (Australia) Pty Ltd (ACN  077 536 871) as Seller and Queensland Fertilizer Assets Limited (ACN 011 062  294) as Buyer, dated December 31, 2004, filed as Exhibit 10.34 to  Form 10-K filed with the Commission on March 24, 2005, and  incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                      |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.35       |       | Warrants to purchase  common stock dated January 10, 2005 and approved April 26, 2005 and  disclosed in Current Report on 8-K filed on April 29, 2005.  Warrants issued to Kenneth L. Ancell, David L. Bradshaw, Jeff T. Obourn,  Eugene I. Davis, Douglas Kramer, Charles T. Maxwell and D. Leroy Sample and  filed as Exhibit 10.35 to Form 10-Q filed with the Commission  on May 16, 2005, and incorporated herein by reference.                                                                                                                                                                                                                                             |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.36       |       | Change in control  severance agreements approved April 25, 2005 and disclosed in Current  Report on 8-K filed on April 29, 2005. Agreements with David L.  Bradshaw, Kenneth L. Ancell, Jeff T. Obourn and Joseph Feiten and filed as  Exhibit 10.36 to Form 10-Q filed with the Commission on  May 16, 2005, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                   |

 

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| **Numbers** | ** ** | **Description**                                                                                                                                                                                                                                                       |
|-------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                            |
| 10.37       |       | Agreement and Plan of  Merger between Tipperary Corporation and Santos International Holdings Pty  Ltd and Santos Acquisition Co. and filed as Exhibit 10.37 to Form 8-K  on July 8, 2005.                                                             |
|        |       |                                                                                                                                                                                                                                                                  |
| 10.38       |       | Amended and Restated  Agreement and Plan of Merger between Tipperary Corporation and Santos  International Holding Pty Ltd and Santos Acquisition Co and filed as  Exhibit 10.38 to Form 8-K on July 8, 2005.                                          |
|        |       |                                                                                                                                                                                                                                                                  |
| 10.39       |       | Amended Change in  Control Severance Agreements approved June 3, 2005 and disclosed in  Current Report on Form 8-K filed on June 9, 2005. Agreements  with David L. Bradshaw, Kenneth L. Ancell, Jeff T. Obourn and Joseph Feiten  and filed herewith. |
|        |       |                                                                                                                                                                                                                                                                  |
| 31.1        |       | Certification of Chief  Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                   |
|        |       |                                                                                                                                                                                                                                                                  |
| 31.2        |       | Certification of Chief  Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                   |
|        |       |                                                                                                                                                                                                                                                                  |
| 32.1        |       | Certification of Chief  Executive Officer of Tipperary Corporation Pursuant to 18 U.S.C. §1350.                                                                                                                                                                  |
|        |       |                                                                                                                                                                                                                                                                  |
| 32.2        |       | Certification of Chief  Financial Officer of Tipperary Corporation Pursuant to 18 U.S.C. §1350.                                                                                                                                                                  |

 

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